Does negative gearing apply for tax purposes as a foreign resident?

 Author: JodieR_ATO(Community Support)Community Support

25 Aug 2022

Hi @Lilbuttercup,

If you have an Australian taxable property and you move overseas, you'd need to report any rental income you make from it each FY. You can also include rental deductions. This section will reflect your rental income minus your deductions. So if there's a loss amount it can reduce your overall taxable income. Alternately a tax loss may be carried forward till the next opportunity to offset it against taxable income.

You'll also need to determine your residency status. If you're a non-resident for tax purposes you won't be entitled to the tax-free threshold, this will increase the amount of tax you have to pay. If you're a foreign resident when you sell or dispose of the property, main residence exemption won't factor in unless you meet the life events test. You' also need to use the worksheet for foreign residents to calculate the CGT discount, as this will be reduced.

If you're an Australian resident when you sell the property, the foreign resident rules won't apply.

You may want to speak with a tax agent for further guidance on this.