Main Residence Exemption Changes for Foreign Residents

Prior to the changes if you were an expat and classified as a non-resident for tax purposes your previous Australian main residence was eligible for the Capital Gains Tax (CGT) main residence exemption in the same way as if you were still an Australian resident. 

Under these rules:

•   A capital gain or loss from the sale of a house is disregarded if the house was your main residence throughout the ownership period

•   You received a partial CGT exemption when your house was a main residence for only part of the ownership period or when the property was also used for the purpose of producing assessible income

•   Could access a 6 year main residence absence concession

The new legislation removes the entitlement to the main residence exemption to those who at the time the contract for the sale of property is signed are:

•   A foreign resident and have been continuously a foreign resident for more than six years; or

•   A foreign resident who has not been a continuous foreign resident for more than six years and does not satisfy one of the below special conditions: 

•   If you are a foreign resident at the time of property sale you will generally not be entitled to the main residence exemption no matter how long you lived in the property

•   No access to the 6 year main residence absence rule 

•   Only entitled to main residence concessions if fall into the special conditions listed above

•   Issues with obtaining cost base records 

The new legislation does not apply to properties purchased before 9th May, 2017 and contract date of sale signed before 30th June, 2020. Therefore there is a small window of opportunity left to still have access to the main residence concessions for non residents thinking of selling a property, but time is running out.