Hi there,
I recently made a permanent move overseas and I am a bit worried about my CGT situation with a property that I own..
I purchased an apartment in Sydney under the FHOG scheme and after living in the property for the required period, moved out and then rented the property out. In the usual case, if I was a Australian resident, I would have the main-residence exemption for a period of up to six years, so I could still sell the property without paying CGT. As I am now a non-resident, does the main-residence exemption still apply?
If I lose the main-residence exemption, would I be better off selling the property in the near term or holding on and dealing with the issue when I decide to sell in the future? My original plan was to hold for the long-term..
Many thanks for your help!
http://www.ato.gov.au/content/00325402.htm
"The government will remove eligibility for the 50% discount on capital gains earned after 8 May 2012 by non-residents on taxable Australian property, such as real estate and mining assets. Non-residents will still be entitled to a discount on capital gains accrued prior to Budget night (after offsetting any capital losses), provided they choose to value the asset as at that time."
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
http://www.ato.gov.au/content/29092.htm
Based on what is on this page it appears you could sell the property within the 6 years, without returning to Oz to do so. Based on my previous post it looks like if you take longer than 6 years to sell it, you need to ponder CGT implications as some of the gain will not be eligible for the 50% cgt discount.
"
Main residence exemption and temporary absence
If you leave your main residence temporarily, you may want us to treat it as your main residence while you are away; for example, if you:
move because of a temporary job transfer
study overseas
take an extended overseas holiday.
Under the capital gains tax (CGT) rules, if you:
use your vacated home to produce income, you can choose to treat that home as your main residence for a period of up to six years
do not use your vacated home to produce income, you can choose to treat it as your main residence for an unlimited period after you cease living in it.
If you choose to treat that home as your main residence, you cannot nominate any other dwelling as your main residence during your period of absence even if you actually live in that other dwelling. There is one exception – the maximum six-month period you can qualify for the exemption on two homes when you are moving from one main residence to another.
You must make the choice by the day you lodge your tax return for the income year in which a CGT event happens, such as selling the house. We use information on your tax return as evidence of your choice.
If you make a choice, it is not affected by you becoming a foreign resident during the period of absence.
"
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
I think the 6 year rule could still apply if you are a non resident. But CGT is generally more for a non resident because no longer get the 50% discount.
And watch out for non land based assets such as shares. Becoming a non resident could trigger CGT as you are deemed to have sold them at that point.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Guys,
Thanks for your advice!
Good to know.. so the best case would be to hold on for a while and sell ideally before the 6 year period. Just hope the values go up a bit in the next couple of years!
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