Australian expats to lose capital gains exemption for the family home

Expatriates who have a property in Australia are now looking to lose their capital gains tax(CGT) exemption on their home. A bill to remove this exemption for non-residents has received royal assent, after already passing both houses in the parliament. The exemption will continue for existing properties until 30 June 2020.

Usually Australians are entitled to nominate one principal place of residence (PPR) where this property will be exempt from CGT. This applies even if you have moved out of the home. You can move out of your nominated PPR for 6 years, otherwise known as the '6 years' rule. This rule was utilised by Australian travelling overseas to explore the world and international employment opportunities.

Expats who have moved oversea but have retained their home will have until the 30 June 2020 to decide what to do with their property before captial gains will begin to accrue.

The glimmer of hope for expats was that the Senate would review the law and hopefully provide a caveat for Australian expats. Unfortunately, that hope has all been extinguished as the bill underwent minor changes before being enacted.

The measure was brought in under the guise of improving house affordability by removing CGT exemption from foreign buyers, which in years past have contributed to higher prices.

This claim seems ingenuous as the small measures could have prevented this from impacting Australian expats. A citizenship clause could have divided the Aussie expats from the foreign buyers. Similar measure have been used in Queensland where land tax thresholds were higher for non-residents. However, citizen non-residents were treated as residents.

It seems this measure was simply a tax grab by the government as the expat community and lobby group that opposed the bill were ignored by the government.

This leaves Aussie expats with homes in Australia with a decision to make on whether to retain the property or whether to sell.

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