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.
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:
- 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.
- 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.