Recent changes in tax laws have affected non-resident taxpayers, especially regarding the Capital Gains Tax (CGT) main residence exemption (MRE). Now, if you're a foreign resident when you sell your main residence, you may not be eligible for the MRE. This affects:
- Individuals selling their main residence while living abroad.
- Trustees handling properties from deceased estates, even if the deceased was a resident.
- Trustees and beneficiaries of special disability trusts, depending on the residency of the principal beneficiary.
These changes are part of the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Bill 2019, effective from 9 May 2017. They apply retrospectively but with some transitional measures for properties owned before that date.
Here's a breakdown:
Before diving in, let's understand CGT for non-residents. If you're not a tax resident of Australia, you only pay CGT on certain assets, like Australian real estate. In the past, even foreign residents could claim the MRE on their main residence. But with the new laws, foreign residents generally can't claim it anymore, even if they met all other requirements.
Got questions? Reach out to Tax Ideas Accountants & Advisers at +61 2 83181545 or book an appointment on our live calendar.
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