Selling Australian Real Estate as an Aussie Expat? Timing is Everything!
If you’re considering selling your Australian real estate as an Australian expat, taking your time could be crucial. The timing of your property sale can significantly impact your Capital Gains Tax (CGT) obligations, making strategic financial planning essential. Whether you’re a seasoned investor or a homeowner, understanding how CGT applies to non-residents and the nuances of financial advice in this context, can help you make more informed decisions and potentially save you a substantial amount of money.
Australian residents benefit from key tax concessions when selling property, including the Main Residence Exemption (MRE) and the 50% CGT Discount. The MRE allows residents to avoid CGT on their primary home, and the 50% discount significantly reduces the CGT payable on assets held for over a year. However, these concessions have undergone significant changes for non-residents, making expert financial advice indispensable.
In this article, we’ll delve into how CGT affects non-residents and outline the key concessions and changes you should be aware of. Whether you’re looking to sell soon or simply exploring your options, understanding these tax implications and integrating them into your broader financial strategy, will be crucial for maximising your return and ensuring a smooth transition.
Main Residence Exemption (MRE)
As of December 12, 2019, the authorities abolished the Main Residence Exemption. This had previously allowed Australians to exempt gains from their main residence. Non-residents can no longer claim this exemption, even if they once lived in the property as an Australian tax resident.
Exceptions to this rule are rare and generally limited to extreme circumstances. For example, death in the immediate family or court orders related to relationship breakdowns. Typically, the MRE is available only if the individual returns to Australia and resumes tax residency.
The Six-Year Temporary Absence Rule once allowed Australian expats to sell their main residence within six years of renting it out with a full CGT exemption. Although non-residents can no longer use this rule, you can still benefit from it if you return to Australia and re-establish tax residency.
50% CGT Discount
As of May 9, 2012, the authorities abolished the 50% CGT Discount. This had allowed Australians to reduce their capital gains by half. As a non-resident, you can only apply the discount proportionately. This means you can only claim the discount for the period you held the property before May 9, 2012, and for any period after this date you were a tax resident.
Non-residents can still access the 50% CGT Discount, but it is now limited. To accurately determine your assessable capital gain, you’ll need to use various calculation methods. This includes property valuations as of May 8, 2012. To ensure precise calculations and compliance with Australian tax laws, you should consult an Australian expat tax accountant.
Final Thoughts
For Australian expats planning to return to Australia or those about to depart, understanding the interaction between CGT concessions and your timing for selling property is crucial. The rules surrounding CGT, especially for non-residents, can be intricate. To avoid costly errors, don’t rely on assumptions about your calculations.
Seek professional expat tax advice to accurately determine your assessable gain and explore strategies to minimise your capital gain. Leveraging options like superannuation can be part of an effective financial strategy. Consulting with a licensed financial adviser or Australian expat superannuation adviser will help you navigate these strategies effectively.
Related News:
You may be interested in our upcoming webinar: Spring Property & Mortgage Update
-
- 25 Sept 2024: 12:00pm AEST – Click here to register
- 26 Sept 2024: 10:00am AEST – Click here to register