Author: tomnz(Newbie)Newbie 15 Mar 2024
I am an NZ citizen on a Subclass 444 visa permanently living in Australia.
If I purchase an investment property in Australia and subsequently sell it after I have become an Australian citizen, do I need to pay full CGT on the period of time that I held the property as a temporary resident (i.e., while I was on a Subclass 444).
My research indicates I will be entitled to a full 50% CGT discount, so long as I satisfy the requirements upon sale (i.e., I am an Australian citizen upon sale).
So, for example:
2024 March: Buy investment property (IP) as a temporary resident (Subclass 444);
2026 March: Become Australian citizen;
2028 March: Sell IP
Please confirm - thanks a lot!
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2 replies
Your research on the CGT discount is right, but remember, you don't have to be an Australian citizen to be a resident of Australia for tax purposes.
To figure out when you became a resident for tax purposes, you need to self assess against some eligibility criteria. Here is an easy online calculator that you can use to figure it out: Work out your residency status for tax purposes | Australian Taxation Office (ato.gov.au).
If you are a resident the entire time, you can follow the normal rules to figure out your CGT and you'll be eligible for the discount (here is the info on the website: CGT discount | Australian Taxation Office (ato.gov.au).
If you do believe you'll became an Australian resident after you purchased the investment property, read this information on the ATO website: How changing residency affects CGT | Australian Taxation Office (ato.gov.au). You'll note that as the asset you are calculating CGT is a taxable Australian asset so you'll calculate your cost base as normal. You would be eligible for the 50% discount as normal.
Also note that if for some reason you are a non resident when the CGT event occurs, in this scenario based on your purchase dates you wouldn't be eligible for the CGT discount. Here is the info on the ATO website about that: CGT discount for foreign residents | Australian Taxation Office (ato.gov.au)
