Selling Your Australian Property as an Expat?

Here’s How to Reclaim the 15% Withholding Tax

If you’re an Australian expat who recently sold your home or investment property back home, there’s a high chance the buyer withheld 15% of the sale price and sent it to the Australian Taxation Office (ATO). This is part of the Foreign Resident Capital Gains Withholding (FRCGW) regime—a tax mechanism aimed at ensuring non-residents settle their tax liabilities from the sale of Australian property.

The ATO has now released a guide outlining how you, as an Australian living overseas, can reclaim the withheld funds—in part or in full—this tax season.

This article breaks it down into plain English, explaining exactly what you need to do and why it matters to your finances.

Why the ATO Withholds 15% When Selling Australian Property as an Expat

If you’re living overseas and no longer considered an Australian tax resident, the ATO classifies you as a foreign resident. That means when you sell real estate in Australia, the buyer is legally required to withhold 15% of the contract price at settlement and send it to the ATO—unless you’ve applied for and received a variation notice.

This rule applies even if:

• You’re an Australian citizen,
• You’ve only recently left the country,
• Or you weren’t aware of your tax residency status.

From 1 January 2025, the ATO increased the withholding rate from 12.5% to 15%, and removed the $750,000 exemption threshold. Now, every sale, no matter how small, is captured.

2. Can I Get That Money Back?

Yes—but only by lodging an Australian tax return.

Whether you’re entitled to some or all of it back depends on your:

• Capital gain or loss from the sale,
• Other Australian income (e.g. rent, investments),
• And whether you have any outstanding tax debts.

If:

• You made no capital gain (or a loss),
• You had no other Australian income, and
• You don’t owe the ATO anything,

Then you can usually claim a full refund of the 15% withheld.

3. What the ATO Now Says: New 2025 Guidance

In July 2025, the ATO released a step-by-step guide titled Claim FRCGW as a credit this tax time, targeted at tax agents. While the language is aimed at professionals, the guidance applies directly to you.

Here’s the translated version for expats like you.

4. Step-by-Step: How to Claim Back FRCGW as an Australian Expat

Step 1 – Check What Was Withheld

Ask your conveyancer, solicitor, or the purchaser for:

• A payment confirmation showing how much was withheld and paid to the ATO,
• A purchaser payment notification form, and
• The property contract date.

This is critical, as you’ll need to prove the withholding occurred.

Step 2 – Determine Which Tax Year It Falls Into

You must lodge a tax return for the year the contract was signed, not the settlement date.

So if you signed the contract on 15 February 2025, you’ll need to lodge a return for the 2024–25 financial year, even if settlement happened later.

Step 3 – Lodge Your Australian Tax Return

You’ll need to:

• Declare the property sale, including the capital gain or loss,
• Include any other Australian-sourced income (e.g. rent, dividends),
• Enter the withheld amount under the section “Credit for foreign resident capital gains withholding”,
• Attach the payment confirmation from the purchaser.

Even if you earned no other income and wouldn’t normally lodge, you must file to claim the withheld money back.

Step 4 – Get Your Refund

If no capital gains tax is owed, the ATO will process a refund for the withheld amount.

No CGT or other tax due = Full refund.

Some tax due = Partial refund (with the balance retained by the ATO).

Tax payable exceeds 15% = No refund (you’ll pay the balance).

5. What If I’m Selling in Future? Here’s How to Reduce or Avoid the 15% Withholding Tax

If you haven’t sold yet, or you’re under contract but haven’t settled, you can reduce or avoid the 15% withholding by applying for a variation notice from the ATO.

This is useful if:

• You’re selling at a loss,
• You have minimal or no tax liability,
• Or the sale price is already covering a mortgage shortfall.

How to Apply for a Variation

• Complete the online form on the ATO website,
• Provide the contract of sale and evidence of expected loss,
• Submit as early as possible—approval can take up to 28 days,
• Give the variation notice to the purchaser before settlement.

Each vendor on the title must apply individually.

If approved, the purchaser will withhold less (or nothing) at settlement.

6. Real-Life Example: Lisa in London

Lisa, an Australian citizen now living in London, sells her Sydney investment apartment in March 2025 for $900,000. She didn’t apply for a variation notice, so the buyer withheld $135,000 (15%) at settlement and sent it to the ATO.

She lodges her 2024–25 Australian tax return in July 2025 and reports:

• A capital loss on the property,
• No other Australian income,
• No outstanding tax debts.

Lisa claims the full $135,000 as a credit on her return.
In August 2025, the ATO issues her a full refund.

7. Common Questions from Aussie Expats

I didn’t know I was a “foreign resident.” Do I still get my money back?

Yes—if you’re living overseas and no longer meet Australian tax residency rules, the ATO still lets you claim the credit by filing a return.

Even if you didn’t realise this before the sale, you can still claim the withheld amount back afterwards.

I sold jointly with my spouse. How does that work?

Each person must:

• Apply for a variation notice separately (if before settlement),
• Claim their share of the withheld amount (if after settlement),
• File their own tax return (if both are considered foreign residents).

I’ve sold and already left Australia. Can I still lodge a tax return?

Absolutely. You can lodge:

• Online using your myGov and ATO-linked account,
• Through a registered tax agent, or
• Via paper return (less common and slower).

Make sure your Australian Tax File Number (TFN) is still active.

Can I lodge early to get my money back faster?

Yes, if you’ve signed the contract and the financial year has ended (i.e. after 30 June), you can lodge straight away for that year.

If the year hasn’t ended yet, you must wait until 1 July to lodge your return.

8. Key Takeaways for Australian Expats Selling Property in Australia

What You Need to Know	Summary
FRCGW applies to all property sales if you’re a non-resident	15% of sale price withheld
You must file a tax return to claim it back	Even if no other income exists
Use the contract signing date to determine which tax year to lodge in	Not the settlement date
Attach proof of withholding and declare CGT in your return	Required for refund processing
Apply for a variation notice to avoid withholding before settlement	If applicable, saves time and cash flow
Refunds are possible if you had no gain or no tax payable	Full or partial refund depending on tax outcome

9. Don’t Leave Money on the Table

Selling your property in Australia from abroad already comes with enough complexity. The last thing you want is to lose 15% of your property sale unnecessarily or delay getting it back because you didn’t follow the right steps.

This new ATO guidance, released in July 2025, clears up a lot of confusion and gives you a straightforward path to get your funds returned. But it does require you to act—lodge a tax return, submit the right documents, and, if possible, plan in advance by applying for a variation.

10. Need Help? Work with an Expat-Aware Tax Adviser When Selling Australian Property

The tax rules around property sales are different for Australian expats, and the FRCGW regime is just one example of where expats can lose out without the right advice.

An Australian expat specialist can:

• Help determine if you’re a foreign resident,
• Lodge your variation notice or tax return on your behalf,
• Minimise unnecessary withholding or delays,
• Maximise your refund potential.

Don’t rely on generalist advice—this is an area where working with the right expert makes all the difference.

Contact Us

If managing your financial affairs across borders is starting to feel overwhelming, you’re definitely not alone. It’s a complex space, and having the right support can make all the difference. At Atlas Wealth Group, we specialise in supporting Australian expats with cross-border tax planning, superannuation, mortgages and wealth management. Contact us to arrange a consultation with a qualified adviser who specialises in Australian expat financial planning to get personalised guidance tailored to your circumstances.

 

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Disclaimer: This article is intended for informational purposes only and does not constitute legal or financial advice. Individuals should consult licensed professionals when seeking guidance regarding their financial circumstances.