Expats buying and selling

Discussion in 'Accounting & Tax' started by jsoe000, 21st Jul, 2021.

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  1. jsoe000

    jsoe000 Well-Known Member

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    Hi all, Here's the expats question.
    I've been out of the country working overseas. Non-resident for tax purposes.
    Just wanting a quick check if my rough idea is still up to date.
    • If I want to sell my house (bought 8 years ago) in Sydney while working overseas, we gotta pay 12.5% CGT as an expat. Is it on the whole gain?
    • Then on the balance (net of CGT 12.5%), full CGT personal tax rate on 100% of the gain? or CGT personal tax rate on 50% of the gain?
    Thanks!
     
  2. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    You need personal tax advice before doing another thing. Selling a property while non-resident changes how tax applies. If the property being sold WAS your main residence than that wont be recognised (it is stripped away as if it never existed) and 100% tax applies to the whole profit. There are a range of issues to consider. Non-residents will not get the 50% CGT discount in any event for the duration of the time period they are non-resident. Some may choose to defer a sale until 6 months after they return and recommence tax residency and then the past exemptions are still given including the 6 year absence rule perhaps but with the 50% CGT loss still possibly a factor.

    A key issues to be determined is when and if your tax residency changed etc I am sometimes told a person is not a tax resident when they are etc. The ATO adopts some complex case law and view points at times. In cases where there is dount a tax office ruling is wise due to the costly issue involved with tax on the gain.

    The word expat has no meaning for tax purposes. We are solely concerning with the (sometimes) complex issue of tax residency
     
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  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    this is not correct
     
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  4. jsoe000

    jsoe000 Well-Known Member

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    NSW
    Sounds more complicated than I thought. Ok I’ll get a proper opinion. We’ve sold PPOR while working overseas before the CGT scrapping came into effect.
    We’ve been away for a little over 6 years now. If we come back next year (COVID-19 is delaying everything more than necessary) 50% CGT exemption still could be a loss? Goodness.
     
  5. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    If you plan to come back I would want to understand how selling AFTER 6 months after you return works. This leaves all past concessionsl alone....It doesnt fix the 50% discount issue if some days are taxable but at least 182 days will be reduced 50% ....And the exempt period still recognised.
     

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