Updated 10 October 2026
Australian property never leaves the ATO's reach. Move overseas and your house stays taxable Australian property, but your concessions do not travel with you: foreign residents at the time of a CGT event generally lose the main residence exemption entirely, lose the CGT discount for their non-resident years, and face 15 per cent withholding on the sale price. Residency status on contract day, and a valuation at the right dates, decide most of the outcome.
At a glance
- Australian real property remains taxable to foreign residents; leaving does not remove it
- The main residence exemption is generally denied to foreign residents for CGT events after 30 June 2020
- A life events exception applies for absences of six years or less involving terminal illness, death or relationship breakdown
- The CGT discount stopped accruing for foreign-resident days from 8 May 2012
- Foreign resident capital gains withholding is 15 per cent with no threshold from 1 January 2025
In this guide
Australian property is always in the net
Whatever your residency, Australian real property is taxable Australian property, so a foreign resident selling an Australian house pays Australian CGT on it. Becoming a non-resident does not trigger a deemed sale of real property, unlike shares and other non-property assets, so nothing happens at departure. The traps are all about what happens at the eventual sale, and they compound.
The main residence exemption is denied
For CGT events after 30 June 2020, a person who is a foreign resident for tax purposes at the time of the event is denied the main residence exemption altogether. Not apportioned, denied. Twenty years of living in the house count for nothing if you are a non-resident on the day you sign the contract, and the six-year absence rule offers no shelter, because it is part of the exemption being denied. The mechanics, with worked numbers, are in our six-year rule scenarios, where the expat case is scenario four.
The event date is the contract date, not settlement. An expat who signs in June and lands home in July has sold as a foreign resident.
The life-events exception
A narrow carve-out preserves the exemption for a foreign resident who, at the time of the CGT event, has been a foreign resident for a continuous period of six years or less, and during that period one of the following occurred: the person, their spouse or their minor child had a terminal medical condition; their spouse or minor child died; or the sale arose from the breakdown of their marriage or relationship. Outside those events, six years or not, the denial stands. This is an exception for hardship, not a planning tool.
The discount you lose along the way
Since 8 May 2012, the 50 per cent CGT discount has been unavailable for periods of foreign residency. A gain accrued partly while resident and partly while non-resident is apportioned, typically using the market value at 8 May 2012 or by days of residency, so the non-resident years take their share of the gain at full rates. From 1 July 2027 this question changes shape again: the discount itself ends for everyone under the enacted reform, replaced by indexation and the 30 per cent minimum tax, with the accrued position preserved through the deemed disposal at that date. Either way, values at status-change dates are what make the apportionment defensible.
The 15 per cent withholding on every sale
Foreign resident capital gains withholding requires the purchaser to withhold 15 per cent of the price on Australian property sales and remit it to the ATO, and since 1 January 2025 there is no price threshold: it applies to every property. Australian resident vendors escape it only by producing an ATO clearance certificate before settlement. A foreign resident vendor has 15 per cent of gross proceeds withheld, cash flow gone at settlement, recovered only through the tax return, or reduced in advance by a variation application where the actual tax will be less. Expats selling should factor the withholding into settlement funding and start the variation early if the gain is small. The mechanics, including the clearance certificate and the variation, are set out in our guide to foreign resident capital gains withholding.
Penalty risk
The compounding worst caseA long-term expat sells the former family home while non-resident: exemption denied in full, discount denied for the non-resident years, 15 per cent of the gross price withheld at settlement, and the gain measured from a section 118-192 reset value they may never have documented. Each problem is manageable; together they routinely turn an expected tax-free sale into a six-figure bill. Every one of them was avoidable with timing and paperwork.
Foreign residents already lose the discount for their non-resident years, so the CGT discount changes from 1 July 2027 matter most to expats who return before selling.
Overseas with Australian property?
Departure, rental-start, 1 July 2027 and retrospective valuations, prepared by a Chartered Accountant and Certified Property Valuer. $297 residential, $595 commercial, incl GST, 24 to 48 hours, Australia-wide, ordered from anywhere.
Start your orderHow it worksBefore you go: the departure checklist
- Value the home at the rental start date. If the house will be rented while you are away, section 118-192 resets its cost base to market value on the first income day. A home to investment valuation at departure is the anchor for every later calculation.
- Decide the sale timing deliberately. Selling before departure, while resident, preserves the exemption. Selling while away, as a foreign resident, forfeits it. If a sale within a few years is likely, the pre-departure sale is often worth more than the rent.
- Confirm your residency position in writing. Tax residency is a facts test, not a feeling, and the exemption hangs on it. Get advice before relying on either status.
- Keep the record file. Lease dates, departure date, the valuation, improvement costs. Apportionment calculations a decade later live or die on this file.
Coming home, and the 2027 overlay
Resume Australian tax residency before the contract date and the exemption framework revives, with the absence years handled under the ordinary six-year rule and apportionment rules rather than the blanket denial. For returning expats holding the property across 1 July 2027, the reform adds its own valuation date: the market value at 1 July 2027 splits the gain between the discount-era rules and the new regime, as covered in our formula vs valuation guide. An expat file can therefore carry three value dates, rental start, 1 July 2027 and any residency-change apportionment point, and a retrospective valuation can reconstruct any of them that were missed at the time.
The CGT calculator puts a figure on the choice for any market and purchase year, on the method in Treasury's exposure draft.
Common questions
Do foreign residents pay CGT on Australian property?
Yes. Australian real property is taxable Australian property regardless of the owner's residency, so a foreign resident selling an Australian house pays Australian CGT, generally without the main residence exemption and without the discount for their non-resident years, and with 15 per cent withheld from the price at settlement.
Can expats claim the main residence exemption?
Only if they are an Australian tax resident at the time of the CGT event, or fall within the narrow life-events exception for foreign residents of six years or less facing terminal illness, death of a spouse or minor child, or relationship breakdown. Otherwise the exemption is denied in full for events after 30 June 2020.
What is foreign resident capital gains withholding?
A 15 per cent withholding the purchaser must take from the price on Australian property sales and pay to the ATO, applying to all properties since 1 January 2025. Resident vendors avoid it with an ATO clearance certificate; foreign vendors recover or reduce it through their return or a variation application.
Should I sell before moving overseas?
If a sale within the next few years is realistic, often yes: a contract signed while you are still an Australian resident preserves the main residence exemption that a later non-resident sale forfeits. Model both paths with your accountant before departure rather than after.
