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Foreign residents selling property in Australia

Foreign resident capital gains withholding (FRCGW) of 12.5% applies for all property sales of $750,000 or more.

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Foreign resident capital gains withholding (FRCGW) of 12.5% applies for all property sales of $750,000 or more. At a minimum, that is $93,750 being withheld from the sale and paid to the ATO, unless there is an approved variation.

The most common reasons why a seller may apply for a variation include:

  • making a capital loss
  • not having an income tax liability
  • foreclosure.

In 2023 over 60% of applications for variations were lodged late, affecting settlement. When your clients are too late applying, the conveyancer or solicitor has no choice but to withhold 12.5%.

Tips

  • Include the sales contracts with the variation application.
  • Variations must be lodged online at least 28 days before property settlement to ensure processing time.
  • The main residence exemption doesn't apply to foreign residents.
  • Australian residents for tax purposes must have a clearance certificate before settlement to prove their residency for tax purposes, so no withholding occurs.

Find out more about FRCGW variations and clearance certificates needed for Australian residents.

 

 

 

ATO
7 March 2024
ato.gov.au

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The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.