Ask Ban Tacs Question
I am an Australian working in Hong Kong on a two year contract – non resident of Aus. We have rented out our family home since moving here in Feb however have decided to look at selling the property. Are there any CGT implications if we do this whilst a non resident?
Answer
Providing the property has always been covered by your main residence exemption up to February then you can use section 118-145 to continue to cover it with your main residence exemption while it is rented out, for up to 6 years. This is providing you do not cover another property with your main residence exemption at the same time. You do not need to cover any property you own overseas with your main residence exemption because while you are not a resident of Australia for tax purposes Australia cannot tax your overseas properties. Nevertheless, you are entitled to utilise your main residence exemption in Australia while you are an overseas resident providing you established the property as your main residence before you left. So if the property is fully covered by your main residence exemption then there will be no tax payable on its sale whether you are a resident of Australia for tax purposes or not.
So in short, you can sell the property that started out as your home in Australia, without any tax consequences, while you are living overseas., providing you do it within 6 years of leaving Australia.
If the property did not become your home immediately after settlement ie it was first a rental property then there will be tax consequences but I will need to know the dates and amounts involved to tell you whether it is better to sell while you are a non resident or when you return.
Of course you will need to do a tax return for the rental income. We have a mail in service you may be interested in. http://www.bantacs.com.au/docs/m3.pdf
