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Removal of Capital Gains Tax (CGT) Discount for Expat Aussies - What You Should Know

Posted by John Leeson on 8 April 2014

By John Leeson
Certified Practising Valuer

Non-residents and off-shore owners of Australian property were targeted in the 2012 federal budget, with the removal of the 50% Capital Gains Tax (CGT) discount.

John Leeson, of independent property advisors Leeson Valuers, explains that although the discount is currently available to all individuals irrespective of residency, the new rule which took effect after 8 May 2012, will largely impact non-resident individuals who hold interests in Australian real estate, he says.

In the ‘busyness’ of living overseas and owning a property back home, many expat Australians may have missed the fact that they are no longer entitled to a 50% Capital Gains Tax discount on Australian taxable property, and many Aussies are still unaware of the implications.

What does this mean?

What this essentially means is that if you live overseas and your property has been held for more than 12 months, any gains that have occurred since 8th May 2012 and up to the date of sale of the property, or up until your permanent re-entry date, will be taxed at 100% instead of the previous 50%.

As a non-resident or expatriate investor, you now have two choices.  You can either:

1. Pay CGT on the full amount of any capital gain made on the sale of the Australian property without access to the 50% CGT discount concession; or

2. Engage a certified practising valuer to obtain a market valuation of the property as at 8th May 2012 and claim a partial 50% CGT discount concession.

John Leeson is a Certified Practising Valuer and member of the Australian Property Institute and REIQ.

Why obtain a property valuation?

Even if you are not an expat Australian, it is always a good idea to obtain an accurate independent property valuation.  This is a particularly important task to complete when you either move out of a property you have been living in and rent it out to a private tenant, usually through a managing agent.  This quarantines your owner occupier Capital Gains Tax free component prior to becoming an investment property.

As the old saying goes, the only two certain things in life are death and taxes.

Property Managers should advise their expat landlords to get a valuation and at least reduce their future Capital Gains Tax liability.
Author:John Leeson
About: Certified Practising Valuer

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