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CGT aspects of selling overseas property.

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Newbie

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Brief synopsis of the situation.

I am an Australian citizen, but non-resident for tax purposes, living in a non-DTA country. I purchased an apartment here in 2017 and have lived in it as my principle/only residence since purchase.

In November 2019, I will move back to Australia, and thus become a tax resident again.

Between Nov 2019 and Nov 2020, I rent the apartment and declare this income on my Australian tax return.

Assume I sell the apartment in November 2020, and make a capital gain.

 

My question relates to the CGT implications of the sale of the apartment.

Can I claim a full main residence exemption in this circumstance ?.

What are the implications of the 6 year rule for overseas property ?

If CGT will be imposed, would the cost base be the purchase price in 2017, or a valuation obtained in Nov 2019 when it ceases to be my residence, and I take up Australian tax residency again?

 

I note there are some similar topics on the threads, but not really the same as my circumstances, and thus a separate answer would be helpful. Thanks in Advance !.

GMD

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ATO Certified

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Hi @GMD,

 

Thanks for your patience whilst we received information from a specialist area regarding your query!

 

If you are an Australian resident when a CGT event occurs in selling your property, the main-residence rules can apply. It doesn't matter that your main residence was overseas when you lived in it, or that you were not a resident of Australia when you lived in it.

 

Under the main residence rules you can choose to continue to treat the dwelling as your main residence after you move out, including the six year rule.
 
The CGT cost base of the property is the market value of the property at the time that you became an Australian resident. You can find more information about Becoming an Australian resident on our website.

 

Thanks, JodieH.

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Taxicorn

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To use the 6-year rule you need to NOT own any other property.

So if you are renting then it remains your Principal Place of Residence and therefore no CGT.

 

 

 

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Community Support

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Hi @GMD,

 

Welcome to our Community.

 

We are seeking some additional information from a specialist area and will respond asap.

 

Thanks, SueO

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Best answer

ATO Certified

Community Support

Replies 0

Hi @GMD,

 

Thanks for your patience whilst we received information from a specialist area regarding your query!

 

If you are an Australian resident when a CGT event occurs in selling your property, the main-residence rules can apply. It doesn't matter that your main residence was overseas when you lived in it, or that you were not a resident of Australia when you lived in it.

 

Under the main residence rules you can choose to continue to treat the dwelling as your main residence after you move out, including the six year rule.
 
The CGT cost base of the property is the market value of the property at the time that you became an Australian resident. You can find more information about Becoming an Australian resident on our website.

 

Thanks, JodieH.