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Facts
Sale of Investment Property at Mosman NSW April 2026 – As a Non resident
- Aust citizen and continuous non-tax resident (France) from 1 November 2013 up to current date. Never returned to Aust after departing.
- Property 100% ownership – purchased contract date 15 July 1999 (settle 26 August 1999) $429,000 (but n/a see below)
- Sale contract date 8 April 2026 (settled 18 June 2026) = ownership = 9,765 days.
- Net sale price after all selling costs $1,206,847
- Non resident from 1 November 2013 to sale contract date 8 April 2026 = 4,542 days = 46.6% of ownership time. Therefore resident 53.4% of ownership time
- Note Main residence from date of purchase 26 August 1999 to date first rented 26 August 2008.
No other main residence but N/A as mv first rented applies. see note below*
- MV at date first rented $660,000 (by local Real Estate Agent appraisal)
- Capital Improvements /major repairs 2025 and 2026 tax years total $193,751. No deductions allowed. Made up of;
- 2025 major renovation (flooding / Asbestos) disallowed by the Tax Office as a deduction $75,340
- and also 2026 year no costs deductible as unit not available for rent – $118,411 per First National Agents Annual Statement
- Note – Non resident capital gains withholding paid to Tax Office on settlement $187,500
Tax Law Applicable (to be confirmed by BANTACS)
- Note non-residents lose the 50% discount for non-resident time after May 2012 (Pro rata).
- Taxpayer departs Aust 1 November 2013. Non-resident from that date. Never returns
- Note New Sec 118-115 from 1 July 2020. Main residence CGT exemption not available to non-residents. This Sec applies also to the main residence 6 year of absent rule (ie. not available to non-resident)
- First rented 26 August 2008 therefore MV at date first rented applies $660,000.
- Major repair/ renovation costs 2025 and 2026 (no deduction) prior to sale $118,411 added to cost base.
- No depreciations claimed on the recent capital works costs $118,411. As not available for rent 2025 and 2026 years.
- Prior year Capital works deductions claimed since 2013 year. No write-back required as purchased prior to 13 May 1997
Answer
Well I can see you are a fan of the BAN TACS web site. Always encouraging when I can see I have an audience. Great analysis except for one small issue the reset to market value at date first rented section 118-192 ITAA 1997 cannot apply. At least that is the popular interpretation.
See https://www.ato.gov.au/law/
118-110(3)
However, this section does not apply if, at the time the * CGT event happens, you:
(a) are an * excluded foreign resident; or
(b) are a foreign resident who does not satisfy the * life events test.
So when section 118-192 says IF you would only get a partial exemption under this subdivision for a CGT event happening in relation to a dwelling or your ownership interest in it because the dwelling was used for the purpose of producing assessable income during your ownership period ……
You see you do not get a partial exemption you get no exemption at all.
Here is the full section:
Partial exemption rules
SECTION 118-192 Special rule for first use to produce income
118-192(1)
There is a special rule if:
(a) you would get only a partial exemption under this Subdivision for a * CGT event happening in relation to a * dwelling or your * ownership interest in it because the dwelling was used for the * purpose of producing assessable income during your * ownership period; and
(aa) that use occurred for the first time after 7.30 pm, by legal time in the Australian Capital Territory, on 20 August 1996; and
(b) you would have got a full exemption under this Subdivision if the CGT event had happened just before the first time (the income time ) it was used for that purpose during your ownership period.
View history note
You are taken to have * acquired the * dwelling or your * ownership interest at the income time for its * market value at that time.118-192(3)
If your * ownership interest in the * dwelling * passed to you as a beneficiary in a deceased’s estate, or you owned it as the trustee of a deceased estate and the * CGT event did not happen within 2 years of the deceased’s death, you apply this Subdivision as if:
(a) you had * acquired the interest as an individual and not as a beneficiary or trustee of a deceased estate; and
(b) for applying the formula in section 118-185 , your non-main residence days were the number of days in your * ownership period when the dwelling was not the main residence of an individual referred to in item 2, column 3 of the table in section 118-195 .Note:
There are special rules for dwellings acquired before 7.30 pm on 20 August 1996: see section 118-195 of the Income Tax (Transitional Provisions) Act 1997 .
2
Answer to your questions:
Tax Law Applicable (to be confirmed by BANTACS)
- Note non-residents lose the 50% discount for non-resident time after May 2012 (Pro rata). Correct but there is an option to use the market value at May 2012 instead
- Taxpayer departs Aust 1 November 2013. Non-resident from that date. Never returns Probably, as long as departure wasn’t initially intended to be temporary, consider TR 2023/1.
- Note New Sec 118-115 from 1 July 2020. Main residence CGT exemption not available to non-residents. I think you mean 118-110 and of course there is no pro rata, not a resident at the date when you sell then no main residence exemption unless been a non resident for less than 6 years and had a major life event.
- This Sec applies also to the main residence 6 year of absent rule (ie. not available to non-resident) Not exactly, if living in Australia as a tax resident when sell then could utilise the 6 years absence rule
- First rented 26 August 2008 therefore MV at date first rented applies $660,000. No as non resident when sell
- Major repair/ renovation costs 2025 and 2026 (no deduction) prior to sale $118,411 added to cost base. Yes also consider, as purchased after 20th August 1991, other holding costs not otherwise claimed as a tax deduction such as interest, rates, insurance, repairs and maintenance reference section 110-25(4)
- No depreciations claimed on the recent capital works costs $118,411. As not available for rent 2025 and 2026 years. Good no write back
- Prior year Capital works deductions claimed since 2013 year. No write-back required as purchased prior to 13 May 1997 Yes
Please note this answer is limited by the information you have provided and should not be relied upon without further professional advice on your particular circumstances.
