Australian expats to be hit with hefty tax
Australians living and working overseas have until June 30 to sell their family homes or face being slapped with a hefty tax after the government reversed its position for exemptions.
A A$581m federal government plan to change capital gains tax arrangements for expats originaly lapsed, but the Australian government is pushing ahead with the changes to the exemption for capital gains tax on main residences.
For decades, Australians living abroad have been able to claim the CGT exemption on the family home. This exemption was available so long as the home was rented out for no more than six years at a time.
However, if the proposed changes go ahead, Australians overseas who have not sold their family homes by June 30 will be hit with capital gains tax — regardless of whether the home was rented out or left vacant — and the tax bill would have dated back from the time the owner purchased their home, not the point at which they moved overseas.
The change will hit the wallets of up to 100,000 Australians working overseas, H&R Block tax expert Mark Chapman told a local news outlet.
“It’s been a bit of a saga this particular bit of legislation,” he said. “If you are a foreign resident and you sell your main residence in Australia, you no longer qualify for the CGT exemption that normally applies when you sell your main residence.
“You literally won’t get the exemption at all, no matter how long you’ve owned the house, no matter how long you’ve lived in it as your main residence.
“Foreign residents are really going to have to do some thinking between now and then about what they’re going to do with their former main residence in Australia.”
Atlas Wealth Management managing director Brett Evans said Australian Bureau of Statistics data shows that there is one Australian resident leaving Australia to live overseas every minute and 53 seconds. He said his firm recently surveyed a sample of more than 3,000 Aussie expats and asked them if they owned a property back in Australia, to which almost 31.5% replied they did.
“That’s why this potential change to the law could affect tens of thousands of expats,” he said.