Changes to capital gains tax legislation from 1 July 2020

04 March 2020

With changes to legislation surrounding capital gains tax (CGT) coming into force this year, we thought we would give you a quick snapshot of what these changes are and how they will affect property owners who have an investment property in Australia. Please read below if you have been considering the sale of your rental property while you are located overseas.

From 1 July 2020, Australian expats who sell their Australian family home while they are residing overseas will not be able to claim an exemption from CGT.  As you may know, the CGT exemption on the sale of family homes has been in place since this tax was introduced back in 1985.  While the CGT exemption is still in place for those who sell their family home while they are living in Australia, it will soon be removed for Australian expats who sell their property while they are living and working overseas. The capital gain will be calculated from when the property was originally purchased regardless of how long it was their family home.  As the CGT exemption is still available until 30 June this year, any property owners in this situation will need to move quickly if they are considering selling.

For example, a property purchased in 2005 for $500,000 that’s now worth $2,000,000 (and used as the family home before going overseas), will be subject to CGT if the property is sold while the owners are living overseas.

As always, there are many rules and exceptions whenever we are dealing with tax laws, and we certainly do not claim to be tax experts! If you think you might be affected by these changes, we urge you to contact your Accountant/tax adviser for further information and advice.  Your adviser is best placed to explain these changes in more detail and should be able to provide you with advice about how they may apply to your specific circumstances.  You can also get further info from  the ATO website, click here.

In the meantime, we will continue to keep you updated on all things property as they arise.  However, if you are affected by these CGT changes and wish to discuss a strategy for a sale prior to 30 June, please get in touch with us on 02 9949 7077.