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Changes to the CGT Main Residence Exemption

Your ‘main residence’ (your home) is generally exempt from Capital Gains Tax (CGT). To be entitled, the property must have a dwelling on it and you must have lived in it.

Proposed new legislation affecting foreign owners

Currently, if you are a foreign resident, you are entitled to the main residence exemption in the same way as individuals who are residents of Australia (for tax purposes).

However, as promised in the 2017-2018 Federal Budget announcement, a bill has been introduced to Parliament which could change this. It was passed in the House the Representatives on 1 March 2018 and is now proceeding to the Senate.

The bill is the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No 2) Bill 2018.

It proposes to remove the Capital Gains Tax exemption for the sale of a main residence by a foreign resident.

The New Rules

If the Bill passes:

  1. from 7:30pm (AEST) 9 May 2017, individuals who are foreign residents at the time they enter into contracts to sell their main residence will not get the exemption, subject to transitional rules.
  2. Transitional rules apply so that the exemption will continue to apply if the main residence –
    • was held by a foreign resident before 9 May 2017; and
    • is sold by 30 June 2019.

What can I do if I am a foreign owner?

If you believe you are affected by the changes to the CGT Main Residence Exemption, you should contact our team to discuss your options.