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Oz expats lose capital gains tax exemption on house sales
| Published: | 28 Aug at 6 PM |
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The Australian government is preparing to debate changes to the capital gains exemption rule for expats selling their home country properties.
Over 100,000 Australian expats living and working overseas will be hit by a ruling removing the exemption of capital gains tax on sales of their home country properties. If the ruling is accepted by lawmakers, experts believe it will lead to a rush to sell before the law is brought in. The change is expected to slow a trend whereby wealthy expatriates are buying into luxury properties due to a fall in the value of the Australian dollar, but tax experts are calling the plan brutal, saying it's unfair for Oz citizens working overseas who’d lived in their homes for years before they moved abroad for work reasons.
Real estate agents are calling the rule an attack on principle residences, adding those who’ve relocated overseas to work are still Australians, and angry expatriates are preparing to lobby for last-minute amendments to the new law. Suggestions include excluding Australian citizens from the changes or providing a partial exemption for the main residence, with wealth management professionals hoping common sense with be brought to bear. However, supporters of the new law are claiming the move will halt speculation by overseas expatriates who are ‘gaming the system’ by speculating in the property market whilst living and working permanently overseas.
The existing law allows exemption for tax on capital gains from selling a main residence, usually the family home, as long as the property was lived in during the period of ownership. Apartments, mobile homes and houseboats are covered by the law, with lawyers pointing out that, even if the new law is brought in , expatriates working overseas are considered as non-residents for tax purposes. However, should an expat wish to return home to supervise the sale of his main residence, it’s likely to make him liable for the capital gains tax if he’s staying in the property whilst the sale is taking place. Those planning to work overseas for an unspecified time will be forced to sell their homes before they leave in order to avoid the tax, regardless of market conditions and negative influences on house prices.
Over 100,000 Australian expats living and working overseas will be hit by a ruling removing the exemption of capital gains tax on sales of their home country properties. If the ruling is accepted by lawmakers, experts believe it will lead to a rush to sell before the law is brought in. The change is expected to slow a trend whereby wealthy expatriates are buying into luxury properties due to a fall in the value of the Australian dollar, but tax experts are calling the plan brutal, saying it's unfair for Oz citizens working overseas who’d lived in their homes for years before they moved abroad for work reasons.
Real estate agents are calling the rule an attack on principle residences, adding those who’ve relocated overseas to work are still Australians, and angry expatriates are preparing to lobby for last-minute amendments to the new law. Suggestions include excluding Australian citizens from the changes or providing a partial exemption for the main residence, with wealth management professionals hoping common sense with be brought to bear. However, supporters of the new law are claiming the move will halt speculation by overseas expatriates who are ‘gaming the system’ by speculating in the property market whilst living and working permanently overseas.
The existing law allows exemption for tax on capital gains from selling a main residence, usually the family home, as long as the property was lived in during the period of ownership. Apartments, mobile homes and houseboats are covered by the law, with lawyers pointing out that, even if the new law is brought in , expatriates working overseas are considered as non-residents for tax purposes. However, should an expat wish to return home to supervise the sale of his main residence, it’s likely to make him liable for the capital gains tax if he’s staying in the property whilst the sale is taking place. Those planning to work overseas for an unspecified time will be forced to sell their homes before they leave in order to avoid the tax, regardless of market conditions and negative influences on house prices.
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