Updated: Aug 20, 2020
Australian's living overseas have until 30 June 2020 to sell their Australian home if they want to avoid big capital gains tax bills.
Australians living abroad have been able to claim the capital gains tax (CGT) exemption on their Australian home. But the Federal Government recently enacted law eliminating the exemption for Australian expatriates, which has been in place since September 1985.
“The change is set to bring in an estimated $581 million for the Federal Government.”
If you sell a property, while residing overseas, the tax bill will date from the time the owner purchased their home, not the point at which they moved overseas. For someone who purchased years ago, it could mean a huge tax bill.
Under the law, foreign residents will be able to claim a CGT exemption on their main residence, if they sell the property on or before June 30, 2020. The change is set to bring in an estimated $581 million for the Federal Government as it backdates the capital gains to 1985.
Exceptions for certain 'life events' (such as a terminal medical condition, death or possibly divorce) may apply. However, "The hardship relief will only apply where an individual has been a foreign resident for a period of six continuous years or less, and only in very limited and unfortunate circumstances," KPMG tax partner Mardi Heinrich said. It would also be available if the resident moves back into their home before putting it on the market, she said.
Your next move: if you live overseas; own Australian property; and either: plan to sell the property OR have no plans to return to Australia, now is the time to act. There is still time to list and sell your property if you wish to beat the deadline.
Contact your accountant to discover if your property will be eligible for Capital Gains Tax should you decide to sell. And, we are available to chat any time re the present value of your property as well as suggest a strategy to achieve a strong and swift sale!