What is the main residence exemption for foreign residents selling property in Australia?
No, foreign residents generally cannot claim the main residence exemption when selling Australian property acquired after 9 May 2017. If owned on or before this date, a transitional rule may apply for sales before 1 July 2020.
Was this helpful?
2 readers found this helpful
2 readers found this helpful
How it works in practice
Main Residence Exemption for Foreign Residents
Previously, all individuals, regardless of their residency status, could generally claim the main residence exemption from Capital Gains Tax (CGT) when selling their home in Australia. However, legislative changes specifically removed this concession for foreign residents.
Impact of Legislative Changes
For properties sold on or after 9 May 2017, if you are a foreign resident for tax purposes at the time of sale, you are generally ineligible to claim the main residence exemption. This means you will likely pay Capital Gains Tax on the entire capital gain from the sale of your property, even if it was your home for some period.
Transitional Rules
There was a transitional period for properties owned on or before 9 May 2017. If such a property was sold before 1 July 2020, foreign residents could still claim the main residence exemption. However, for sales on or after 1 July 2020, this transitional rule no longer applies, and the exemption is typically unavailable to foreign residents.
Important exceptions
The primary exception applies to properties owned on or before 9 May 2017 and sold before 1 July 2020. In this specific timeframe, foreign residents could still claim the main residence exemption. Beyond this, exceptions are limited.
If you cease to be a foreign resident before selling, the rules may change. Also, for Australian residents who become foreign residents for a period, specific temporary absence rules may apply to retain eligibility for the exemption for part of their ownership period.
What you should do now
-
Determine your tax residency status at the time of property sale, as this is crucial for CGT rules.
-
Check the acquisition date of your property to understand if any transitional rules apply.
-
Calculate your potential capital gain or loss accurately, considering the new foreign resident rules.
-
Seek professional tax advice from a qualified Australian tax agent for complex situations.
-
Ensure all property sales and capital gains are correctly reported in your Australian tax return.
Expert Notes
No expert notes have been added to this question yet.
People also asked
Explore highly relevant questions and get instant verified short answers.