Hi,
I have just got my PR visa granted and intending to land into Australia soon. I am planning to rent an apartment in Brisbane and intending to sell my house here in Malaysia in 6-12 months. This house has been my main residence for the past 10 years.
Am I eligible for the CGT main residence exemption if I become a tax resident of Australia?
Thanks.
Yes, as long as you don't own any other property.
Yes, as long as you don't own any other property.
Thanks.
I wonder if the fact that I was holding my Malaysian house (a foreign property) as a foreign resident for 10 years versus being a tax resident in Australia for the first time, will have an impact on my eligibility on main residence CGT exemption.
Will this be a concern? (besides not owning any property during my 1st year in Australia)
Hi @Ravi1,
From the time you land in Australia you are taken to have acquired the asset, this is also when you become a resident for tax purposes. Main resident exemption for foreign residents has changed and is no longer an option unless you meet the life events test, this is for properties held in Australia.
We will only be looking at the asset from the time you land in Australia, so it cannot be considered your main residence. If you are renting it out in Malaysia, any income you make will need to be included in your tax return. Even if it remains vacant, you will still need to declare a capital gain or loss.
You can use 'market value', the amount it is valued at when you first arrive here. If you sell 6mnths later, depending if it increases/decreases or stays the same, will be the sale price less the market value. This will result in your capital gain/loss.
Links -
Becoming an Australian resident for tax purposes. - Mentions you're taken to have acquired certain assets at the time you became a resident for their market value at that time. If you want this explained further you may contact our early engagement team. They can provide you with a broader explanation.
Working out your capital gain or loss.
Foreign resident and main resident exemption. This will not influence your situation as you are deemed to have acquired the asset when you first arrived here.
All the best and welcome to Australia.
Wow, many thanks to Jodie2 and macfanboy for offering help :heart:
All Aussies were amicable!
Looking forward to my settlement to this lovely country.
hi Judie from ATO. i also have a friend who is in the same position.
1-could you please advise me when the law changed and
2-what Law will apply to my friend who came to Australia in May 2006.
regards,
Elia
Hi @etanious3
The rule for foreign residents and the main residence exemption changed effective from 30 June 2020. For foreign residents who sell a main residence, they can only use the main residence exemption if they pass the life events test.
This rule applies to all foreign residents who sell property after 30 June 2020, no matter when they arrived in Australia.
You can read about the main residence exemption for foreign residents on our website.
Hi @Jodie_ATO,
My parents are in a similar situation as described originally at the top of this thread, ie. Been living in home country in one property for 20years, now granted AU PR, they would like to come here and rent, and then in the next 12months sell the property in original country and then buy an AU property to move in.
Do they have to pay any CGT given that they only own that one property?
In other words, after they take up the PR, is their original home still their principal place of residence? Meaning they can keep that status while renting it out for up to 6 years? (Which also means when they buy their AU property they have 6 months to consider both as their PPOR?)
From my reading of the main residence exemption for foreign residents , that page doesn't seem to apply to them since they'll become AU tax residence after they accept the PR and move here?
Many thanks!
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