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Will I be taxed by Australia if I own real estate in the U.S. and I cease to be a permanent resident

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I am a U.S. citizen with an Australian partner and considering moving to Australia as a permanent resident.
Can someone clarify what would happen if I own real estate in the U.S. prior to applying for permanent residence in Australia, live in Australia for some  years and then move back to the U.S. permanently?

According to this source: When you leave Australia https://www.ato.gov.au/Individuals/International-tax-for-individuals/Going-overseas/When-you-leave-A...

1. If you cease to be an Australian resident while overseas, we deem some of your assets – generally those not considered taxable Australian property – to have been disposed of for CGT purposes. This may mean you become liable to pay CGT.

 

2. You can choose not to have this deemed disposal apply. But if you do eventually dispose of the asset, we take into account the whole period of ownership – including any period when you're not an Australian resident – when we calculate a gain or loss for CGT purposes.”


My understanding so far of the above two points is:


1. I pay taxes on the appreciation of the property with cost basis as market price at the time I apply for Subclass 820 Temporary Partner Visa
and the market price on the day I leave Australia (even if I don’t sell the home). i.e. If home price appreciated by $100,000 during the years in Australia, I pay capital gains tax on the $100,000. If this is true, how does the ATO calculate market price ? What is the tax rate?

2. Pay capital gains tax to Australia after I actually sell the home after returning to the U.S. on the difference between the price home was sold for and cost basis of price when I purchased the home (even if it was purchased before moving to Australia) i.e. The property appreciates $500,000 10 years prior to moving to Australia, it appreciates $100,000 during the 5 years I live in Australia, then appreciates another $400,000 when I sell 10 years after moving back to the U.S.. Is this stating that I would be taxed on capital gains for the total $1,000,000 in appreciation? and if so at what rate?

 

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Hi @sing11

 

I can understand you wanting to get yourself all prepared for the change so thanks for your queries.

 

These are some links that will speak to your questions generally.

 

One on Temporary Residents, the other on Changing Residency. In one there is a good example about Fred that may be particularly useful to you.

 

As your queries are detailed if you're still uncertain a written response or contact into our Telephony services (see Oversea Enquiries) may prove useful. You can ask to be put through to our CGT Teams when you speak to our Switchboard.

 

Hope this is helpful.

 

Regards

KylieS


 

 

1 REPLY 1

Best answer

Community Support

Replies 0

Hi @sing11

 

I can understand you wanting to get yourself all prepared for the change so thanks for your queries.

 

These are some links that will speak to your questions generally.

 

One on Temporary Residents, the other on Changing Residency. In one there is a good example about Fred that may be particularly useful to you.

 

As your queries are detailed if you're still uncertain a written response or contact into our Telephony services (see Oversea Enquiries) may prove useful. You can ask to be put through to our CGT Teams when you speak to our Switchboard.

 

Hope this is helpful.

 

Regards

KylieS


 

 

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