In March 2020 new rules came into effect if you are a non-resident for tax purposes and you sell the property that was previously your home or principal place of residence.
This change applies for any sales of property after 1 July 2020 that were formerly exempt from Capital Gains Tax (CGT) under the Main Residence Exemption rules.
An Australian Tax Return must be prepared in this situation even if you have no other taxable Australian income and do not anticipate returning to Australia. Under Australian Tax Law all sales of 'Real' Property are taxable and must be declared.
Fortunately there is a 'life events test' that may assist those selling a property in unforeseen circumstances. The gain will remain exempt if you can satisfy the following conditions:
- you were a non-resident for tax purposes for a continuous period of 6 years or less and during that one of the following occurred:
- you, your spouse or your child under 18 had a terminal medical condition; or
- your spouse or your child under 18 died; or
- the CGT event (sale or transfer) occurred as part of a distribution of assets between you and your spouse as a result of a divorce , separation or similar maintenance agreement.
Remember if this is also subject to tax in the country in which you currently pay tax you will be entitled to a credit for any tax paid on the sale in that country.