Capital Gains Tax on former Australian home – now living overseas

(Initiate)Initiate

12 Jan 2026

Hello,

I am an Australian citizen. I purchased a residential property in Australia in August 2018, and it was my main residence from August 2018 until January 2020.

During COVID, I lost my job and moved overseas in January 2020. I began renting the property from May 2020, and it has remained rented since then. I am currently living overseas. I have also been unable to return to Australia due to my family circumstances and not having employment in Australia. However, I am filing Tax on my rental income in Australia every year.

I would appreciate clarification on the following:

Does the main residence CGT exemption still apply to the period when I lived in the property (August 2018 – January 2020)?
Can I apply the 6-year absence rule while the property is rented and tax returns are filed in Australia for rental income, even though I am living overseas?
If I sell the property while I am living overseas, will the entire capital gain be taxable, or I am I eligible for 50% tax exemption rule on CGT?
What will be the tax rate (Percentage tax) on capital gains while living overseas?
The property purchase price was AUD 3,35,000 and the estimated selling price is AUD 4,00,000. How much tax will be payable as per the law in this scenario?

Thank you for your guidance.

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Most helpful reply

YellowPotato

(Taxicorn)Taxicorn

13 Jan 2026

Can't give any clear answer as not enough information to go on.

Australian Citizen =/= Australian tax resident. You can be Australian citizen and foreign tax resident.

It may be best you see a tax agent (accountant) to discuss your questions and clarify the information I have mentioned below.

MRE depends on your tax residency at TIME OF DISPOSAL. Generally, if Australian tax resident, then you can use MRE rules. Generally, if foreign tax resident, then unlikely able to use the MRE rules.
1. https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/foreign-residents-and-capital-gains-tax/main-residence-exemption-for-foreign-residents
Same thing as one
CGT discount depends on your tax residency throughout your ownership of the CGT asset. Australian tax residents have CGT discount; Foreign tax residents do not. If there's a mix of Australian and foreign tax residency, then you portion how much discount
1. https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/foreign-residents-and-capital-gains-tax/cgt-discount-for-foreign-residents
Again depends on your residency. Australia doesn't have separate tax for capital gains. The net capital gains are added to your taxable income and then pay income tax based on your taxable income.
Again depends on your residency. It's not necessarily your purchase price that is your cost base. If able to use MRE, then likely would need a valuation of property for when it was used for income producing purposes. If can't use MRE, then you can use your purchase price as the starting cost base.
1. https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/property-and-capital-gains-tax/your-main-residence-home/using-your-home-for-rental-or-business#ato-Valueofhomewhenfirstusedtoproduceincome

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Most helpful reply

YellowPotato

(Taxicorn)Taxicorn

13 Jan 2026

Can't give any clear answer as not enough information to go on.

Australian Citizen =/= Australian tax resident. You can be Australian citizen and foreign tax resident.

It may be best you see a tax agent (accountant) to discuss your questions and clarify the information I have mentioned below.

MRE depends on your tax residency at TIME OF DISPOSAL. Generally, if Australian tax resident, then you can use MRE rules. Generally, if foreign tax resident, then unlikely able to use the MRE rules.
1. https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/foreign-residents-and-capital-gains-tax/main-residence-exemption-for-foreign-residents
Same thing as one
CGT discount depends on your tax residency throughout your ownership of the CGT asset. Australian tax residents have CGT discount; Foreign tax residents do not. If there's a mix of Australian and foreign tax residency, then you portion how much discount
1. https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/foreign-residents-and-capital-gains-tax/cgt-discount-for-foreign-residents
Again depends on your residency. Australia doesn't have separate tax for capital gains. The net capital gains are added to your taxable income and then pay income tax based on your taxable income.
Again depends on your residency. It's not necessarily your purchase price that is your cost base. If able to use MRE, then likely would need a valuation of property for when it was used for income producing purposes. If can't use MRE, then you can use your purchase price as the starting cost base.
1. https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/property-and-capital-gains-tax/your-main-residence-home/using-your-home-for-rental-or-business#ato-Valueofhomewhenfirstusedtoproduceincome

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NFCH

(Initiate)Initiate

13 Jan 2026

Thank you very much for your reply. It helped me to understand.

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Taxduck

(Taxicorn)Taxicorn

13 Jan 2026

What will be your tax residency at time of sale? That is the only fact that will determine the tax treatment of the sale of the property.

Every seller of Australian property who is an Australian tax resident now has to obtain a foreign resident capital gains tax withholding clearance certificate otherwise 15% of the sale proceeds will be withheld by the purchaser and sent to the ATO. This withholding is in anticipation of the tax payable on the sale proceeds.

Foreign residents can't obtain one of these certificates

Australian residents and clearance certificates | Australian Taxation Office.

No one can say how much tax is payable on your figures as this depends on all your income (including the net gain) and deductions as reported on your tax return. The 15% foreign resident withholding is then used to help pay the tax payable.

Assuming you sell as a foreign resident then the tax rate for foreign residents is below

Tax rates – foreign resident | Australian Taxation Office

Be aware of cost base elements for the CGT calculation. Also reducing your taxable income as much as possible reduces tax payable. Using super deductions (with unused concessional caps if eligible) can reduce your taxable income. Relevant information below

Cost base of assets | Australian Taxation Office

Personal super contributions | Australian Taxation Office

Concessional contributions cap | Australian Taxation Office

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NFCH

(Initiate)Initiate

13 Jan 2026

Thank you very much for your reply.

It has helped me.

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