Topics on recent tax amendments on CGT (3)

Understanding the Main Residence Exemption (MRE) for Foreign Residents

When you sell a property that has been your main home, you might not have to pay tax on the profit, thanks to something called the Main Residence Exemption (MRE). Here’s how it works:

• Full Exemption: You won’t have to pay any tax on the profit if the property was your main home for the entire time you owned it, and you didn’t use it to earn money (like renting it out).
• Partial Exemption: If the property was only your main home for part of the time you owned it, or if you used it to earn money, you might only have to pay tax on part of the profit.

Changes Since May 9, 2017

However, there have been some important changes for foreign residents. If you are not an Australian resident for tax purposes when you sell your home, these exemptions might not apply:

• If you sell your home after May 9, 2017, and you are a foreign resident at the time of the sale, you generally can’t use the MRE.
• This rule also applies if part of your property is taken over by the government (compulsory acquisition).

Special Note for Selling Your Home

The key moment for tax purposes is usually when you sign the sales contract, not when you finalize the sale. So, your residency status at the time you sign the contract is what matters, even if you move back to Australia before the sale is finalized.

If you need more information or have any questions, please don’t hesitate to contact Tax Ideas Accountants & Advisers at +61 2 83181545 or book an appointment through our live calendar.

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