Homeowners, who sell while they’re living overseas, could lose the capital gains tax exemption on a home which used to be their main residence in reforms targeted at foreign investors to safeguard the opportunity for Australian buyers to purchase.
The reforms announced as part of the 2017-18 Federal Budget in May. are a part of a host of changes to policy investment rules aimed at improving housing affordability,
Under current laws, Australian residents get a full exemption from capital gains tax on the sale of a home, that was their main residence, throughout the ownership period. Capital gains tax is a tax on the profits earned on an asset in the time that a person buys, then disposes of it. It’s not a separate tax but rather the capital gain is included in a person’s taxable income in the year when the sale was made, then calculated as part of income tax.
Australian residents also receive a partial exemption if the home was their main residence for only part of the ownership period. And they benefit from an “absence rule,” which allows them to treat a dwelling as their main residence for capital gains tax purposes for an unlimited period of time, as long as they keep it empty and don’t rent it out.