In the 2017-2018 Federal Budget, the Government revealed that non-residents and temporary residents may no longer use the CGT main residence exemption. The Government then later assured that the exemption would still be offered to temporary residents, provided that they were residents of Australia under the normal residency tests.
The suggested policies would prevent non-residents from claiming the main residence exemption, regardless of whether they were a resident for some or even most of the ownership period. They also will not allow for partial exemptions.
However, if an individual is an Australian resident at the time that they sell a property, the normal CGT main residence exemption rules will apply, whether you were a non-resident for some or most of the ownership period.
The proposed policies become more complicated regarding deceased estates. Under the new laws, the transitional period for non-residents to make plans to either sell their property or reorganise their affairs will close on 30 June 2019. The transitional period is applicable if the property was secured at 7.30PM (AEST) on 9 May 2017 and is offered under a contract entered into on or prior to 30 June 2019.
In the event that there is no contract of sale available by 30 June 2019, and the seller is a non-resident at the time of the transaction, the CGT main residence exemption will not be applicable.
Individuals who are residing and holding a job overseas while still keeping their main residence in Australia will need to figure out their future intentions to come back to Australia. Property tax specialists will then have the ability to offer resolutions concerning their current and future tax residency status. As a result of those assessments, advisors can then offer advice on the tax ramifications of the different scenarios in connection with property.
By having the proposed laws delayed in the Senate, non-residents remain in an uncertain circumstance. Should the new laws pass along with their current deadlines, it would be tough to sell any property in time to satisfy the transitional period requirements.
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