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Re: Selling my home while overseas

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Hi ATO team

 

I have a tax question I was hoping you could help me with.  I bought my home in Australia in early 2012, then met my partner and  moved overseas with them in 2013.  I kept my home and rented it as a holiday rental while returning to live in it for a few weeks every year to see family and friends. 

 

In Feb last year my accountant advised me that new changes to CGT for foreign tax residents were taking effect in June 2020, and that I had until then to get home and sell my house if I wanted to be able to access the 50% CGT deduction.  I made plans to come home in May, but by then the borders had closed and I haven't been able to return since.  My question has two parts:

 

- is there any discretion when applying the June 2020 deadline to people who haven't been able to return to Australia?

- if not, I'll return to Australia when the borders open next year (hopefully) and sell my home some time in 2023 (subject to satisfying the tax residency rules).  How would the sale be taxed?

 

Thanks

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Hi @Downramp,

 

In relation to your questions - is there any discretion when applying the June 2020 deadline to people who haven't been able to return to Australia?

 

For main residence to apply, you would need to meet the life events test. If this isn't possible, you wouldn't be able to use the main residence exemption. You can contact our early engagement team in relation to whether any discretion could apply due to covid-19. 

 

- if not, I'll return to Australia when the borders open next year (hopefully) and sell my home some time in 2023 (subject to satisfying the tax residency rules).  How would the sale be taxed?

 

If you're living in Australia when you sell your property there are a couple of things to consider. Did you originally live in the home as your main residence? If the answer is yes, you can use the partial exemption. This takes into account the no' of days it was not your main residence over the no' of days you owned the property.

 

The formula is A × (B ÷ C), where:

  • A is the total capital gain from the CGT event,
  • B is the number of days in your ownership period when the dwelling was not your main residence and
  • C is the total number of days in your ownership period.

 

Thereafter you will report your total capital gain at the total capital gain label. As you owned the property for 12mnths+, you can then check the CGT discount, information. If you were still overseas, you could review CGT discount for foreign residents.

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Most helpful response

ATO Certified Response

ATO Community Support

Replies 0

Hi @Downramp,

 

In relation to your questions - is there any discretion when applying the June 2020 deadline to people who haven't been able to return to Australia?

 

For main residence to apply, you would need to meet the life events test. If this isn't possible, you wouldn't be able to use the main residence exemption. You can contact our early engagement team in relation to whether any discretion could apply due to covid-19. 

 

- if not, I'll return to Australia when the borders open next year (hopefully) and sell my home some time in 2023 (subject to satisfying the tax residency rules).  How would the sale be taxed?

 

If you're living in Australia when you sell your property there are a couple of things to consider. Did you originally live in the home as your main residence? If the answer is yes, you can use the partial exemption. This takes into account the no' of days it was not your main residence over the no' of days you owned the property.

 

The formula is A × (B ÷ C), where:

  • A is the total capital gain from the CGT event,
  • B is the number of days in your ownership period when the dwelling was not your main residence and
  • C is the total number of days in your ownership period.

 

Thereafter you will report your total capital gain at the total capital gain label. As you owned the property for 12mnths+, you can then check the CGT discount, information. If you were still overseas, you could review CGT discount for foreign residents.