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There are special capital gains tax (CGT) rules you need to know if you’re a foreign resident (of Australia) for tax purposes. The rules will impact you when you sell residential property in Australia, and could have significant tax implications.

In Australia you are exempt from paying tax on the gain you make when selling a property which is your main residence – called the ‘Main Residence Exemption’ (‘MRE’). A further allowance is that this main residence treatment can be extended for up to six years of absence from the property, assuming it is still your one and only ‘main residence’ for tax purposes. This provides people with the flexibility of moving interstate or indeed, overseas…..until now.

I am Australian and I have moved overseas - How am I affected?

On 5 December 2019 a bill was passed to deny the MRE to taxpayers who, at the time of the CGT event (ie when you enter into the contract to sell), are a non-resident of Australia for tax purposes.

This means that a property you previously planned to treat as your main residence, while spending a few years overseas, may indeed be taxable when you come to sell the property.

Is there anything I can do to mitigate it?

There are a few options available to you which may eliminate or reduce the amount of capital gains tax you pay. There are also some legal exemptions. But it is critical you act as soon as possible.


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