Foreign Residents Face Tax Bill on Sale of Aussie Home

Foreign Residents Face Tax Bill on Sale of Aussie Home




Foreign residents (also known as non tax residents) of Australia will soon have to pay tax if they sell their own homes at a profit.

This change, announced in the 2017-18 Federal Budget, potentially affects all property owners from 9 May, 2017 in two broad categories.

The first is those who sign a purchase contract for a property after 7.30pm on 9 May, 2017, and sell that property as a non tax resident of Australia. These people will need to calculate whether a capital gain has been made and pay tax accordingly. This will apply regardless of your tax residency status when you bought the property.

For example, if you are a tax resident of Australia when you buy the property, but then move overseas and become a non resident, the CGT calculation will apply if you sell while a non tax resident. And there is no pro-rata available between your time as a resident and non resident for tax purposes.

The second are foreign residents for tax purposes who owned their own homes prior to 7.30pm, 9 May, 2017. These people will be able to access the old CGT free tax exemption rules until 30 June, 2019. From 1 July 2019, the new CGT rules on sale of your own home will apply to this group.

As with any change to tax laws, there can be a lot of twists and turns in relation to applying these new rules in practice. Some of the key points to remember include:

• Your tax residency and your citizenship status may not be the same.  In other words, even if you are an Australian citizen, you may be a non resident for tax purposes.   
• If you are a tax resident when you buy your own home, but then become a non resident, you may still be caught if sell while a non resident.
• The rules do not allow you to apportion the gain between the time you have been a resident and non resident.
• There are no concessions for non residents currently accessing the six-year tax free absence rule, apart from the grandfathering for sales up to 30 June 2019.
• However, where an individual returns to Australia and resumes Australian tax residency, they may still be able to claim main residence exemption.

If you own a principle place of residence (your own home) in Australia and you are already a non resident for tax purposes, or planning to become so, then you should seek some specific advice from a taxation specialist in relation to your situation.

Contact us on or 07 3510 1500.

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