CGT on Overseas Property Australia 2026-27: Rules Guide

If you are an Australian resident for tax purposes and you sell a property overseas, the gain is reported in your Australian tax return — in Australian dollars, at your normal marginal rates. The money can stay in a foreign bank account, the price in the local currency can barely move, and Australia still wants its share. Plenty of migrants and returning expats learn this the expensive way.

This guide covers how capital gains tax applies to overseas property in 2026-27: when it applies, how your cost base is set from the day you arrived in Australia, the currency trap that manufactures gains out of flat prices, the foreign tax offset that stops double taxation, and the traps — including the 1 July 2027 reform deadline — that can cost you tens of thousands if you get the timing wrong.

Quick answer: do I pay CGT on a property sold overseas?

Yes, if you were an Australian resident for tax purposes (and not a temporary resident) when you signed the sale contract. The ATO’s position is unambiguous: “If you are an Australian resident, your capital gains on overseas assets are treated in the same way as your capital gains on Australian property.” The gain is worked out in Australian dollars, the 50% CGT discount applies if you held the property more than 12 months, and tax paid overseas on the same gain can usually be claimed as a foreign income tax offset — capped at the Australian tax on that gain.

Who is in, and who is out

Everything turns on your tax residency on the day the sale contract was signed — not settlement, not when the money arrived. Citizenship and visas are not the test.

Your status when you signed the contract	Australian CGT on the overseas property
Australian resident for tax purposes (most citizens and permanent residents living here)	Yes. The gain or loss is reported in your Australian return.
Temporary resident (temporary visa, and neither you nor your spouse is an Australian citizen or permanent resident)	Generally no. Temporary residents are taxed like foreign residents on capital gains — only taxable Australian property counts.
Foreign resident for tax purposes	No. Only taxable Australian property is subject to Australian CGT. (Australia’s right to tax your overseas property belongs to the country it sits in.)

People who work overseas can remain Australian residents under the domicile test even while living abroad, so “I live overseas now” is not, on its own, an answer. If your status during the year is murky, settle it before you lodge — the residency tests decide everything that follows.

Your cost base is probably not what you paid

This is where most self-prepared calculations go wrong. When you become an Australian resident for tax purposes (and you are not a temporary resident), the law treats you as having acquired your CGT assets on that day, at their market value. The ATO calls this deemed acquisition.

So if you bought an apartment in Shanghai in 2012 and moved to Australia in July 2023, your Australian cost base starts from the apartment’s market value in July 2023 — not the 2012 price. Growth before you became a resident is outside Australian tax entirely; growth after it is inside. Two consequences follow:

• The 12-month discount clock restarts on residency day. Own it for a decade, arrive in September 2026, sell in May 2027 — no 50% discount, because the Australian clock ran under 12 months.
• You need evidence of value on a day you may not have documented. A contemporaneous valuation is best; otherwise a retrospective valuation from a qualified valuer, or documented comparable sales from around that date. This single document is often the difference between a clean audit and a painful one.

Deemed acquisition does not apply to assets you acquired before 20 September 1985 (pre-CGT) or to taxable Australian property such as Australian real estate.

Every amount is converted to AUD on its own date

Under the translation rule (section 960-50 of the tax law), each amount in the calculation is converted to Australian dollars at the exchange rate applying at the time of that transaction or event. The cost is converted on the day you acquired the property (or the day you became a resident, for a deemed acquisition); buying costs on the dates they were paid; the sale price on the contract date; selling costs on the dates incurred. The ATO publishes exchange rates and uses the Reserve Bank of Australia’s rates.

The common shortcuts — converting the whole deal at a year-end or annual-average rate, or at the rate on the day the money landed in your Australian account — do not follow the rule for capital assets and can move the result by tens of thousands of dollars in either direction.

The currency trap: a flat price that produces a taxable gain

This is the trap that catches nearly everyone. Watch what happens when a property doesn’t move in the local currency at all:

• Mei became an Australian resident in July 2023, keeping a Beijing apartment valued at ¥2,000,000. Rate then: 4.83 CNY per A$1 → cost base in AUD: A$414,039.
• She sold in May 2025 for the same ¥2,000,000. Rate then: 4.55 CNY per A$1 → sale proceeds in AUD: A$439,560.
• Result: a capital gain of A$25,521 — on a property whose price in yuan never moved. The Australian dollar weakened in between, inflating the yuan amount in Australian-dollar terms.

The mirror image exists too: a rising local price can still produce an Australian-dollar loss if the AUD strengthened hard during your ownership. Always do the conversion twice, on the two real dates, before deciding whether a sale is even profitable in Australian terms.

2026-27 tax rates that apply to the gain

A net capital gain is not taxed at a special CGT rate — it is added to your other income and taxed at your marginal rate, plus the 2% Medicare levy. For 2026-27, resident rates are:

Taxable income	Tax on this income
$0 – $18,200	Nil
$18,201 – $45,000	15c for each $1 over $18,200
$45,001 – $135,000	$4,020 plus 30c for each $1 over $45,000
$135,001 – $190,000	$31,020 plus 37c for each $1 over $135,000
$190,001 and over	$51,370 plus 45c for each $1 over $190,000

Note the second bracket is 15% from 1 July 2026 — some older calculators and guides still show the previous 16%, which understates nothing for the gain itself but will make their worked examples disagree with yours. And the 50% CGT discount shown below still applies for gains on contracts signed before 1 July 2027; what replaces it after that date is covered near the end of this article.

Step-by-step: calculating CGT on an overseas property sale

1. Confirm the CGT event date. The gain is made when the contract is signed, not at settlement. A contract signed in May 2027 belongs in your 2026-27 return even if settlement is in August 2027.
2. Confirm your residency on that date — resident, temporary resident, or foreign resident.
3. Set the cost base. Resident when you bought: original price + buying costs + eligible improvements. Bought before becoming a resident: market value on the day you became a resident, plus improvements made after that date.
4. Convert every amount to AUD at the rate on its own date — cost, improvements, sale price, selling costs.
5. Gross gain = AUD capital proceeds minus AUD cost base.
6. Apply the 50% discount if held (or deemed held) more than 12 months.
7. Subtract capital losses first — current-year losses and carry-forwards come off the gross gain, and the 50% discount then applies to what is left. Getting the order wrong inflates the tax: see our guide to carrying capital losses forward.
8. Add the net gain to your taxable income — taxed at your marginal rate plus 2% Medicare levy.
9. Claim the foreign income tax offset for tax paid overseas on the same gain, capped at the Australian tax on the gain. To check the arithmetic, cgthub.au’s CGT calculator handles the discount and marginal-rate maths — just feed it AUD figures you have already converted.

Worked example: Meera’s London flat (2026-27 figures)

Meera moved to Australia on a permanent visa in July 2022 and became an Australian resident for tax purposes that month. She kept her London flat, bought in 2016 while she was a UK resident. In May 2027 she signs a contract to sell it.

Step	Detail	Amount (AUD)
Cost base	Market value July 2022: £620,000 at £1 = A$1.7857 (deemed acquisition — the 2016 purchase price is irrelevant)	$1,107,134
Capital proceeds	Contract May 2027: £700,000 at £1 = A$2.08	$1,456,000
Gross capital gain	$1,456,000 − $1,107,134	$348,866
50% CGT discount	Held (deemed) for nearly 5 years — well over 12 months	−$174,433
Net capital gain	Added to her $120,000 salary	$174,433
Tax on the gain	At 30% + 2% Medicare levy	$55,819

The flat gained roughly 13% in pounds over five years, but the Australian-dollar gain is far larger because sterling strengthened against the AUD — $55,819 of tax at 30% + 2% Medicare, before any foreign tax offset.

Suppose the UK charged her £24,000 in UK capital gains tax — about A$49,920 at the sale-date rate. Her foreign income tax offset is $49,920 (under the $55,819 Australian-tax cap), leaving a net Australian tax of $5,899. Had the UK tax been A$70,000, the offset would stop at $55,819 and the $14,181 excess would simply be lost — no refund, no carry-forward. That cap is the part most guides skip.

Tax paid overseas: what the offset does and doesn’t do

• Only foreign income tax counts. Transfer duties, stamp duties, VAT and agent commissions are not income tax — though some legitimately form part of your cost base or selling costs.
• The offset is capped at the Australian tax on the gain. If the foreign tax was higher, the excess is lost — no refund, no carry-forward. Keep the overseas assessment or receipt as evidence; without it, the ATO can deny the offset.
• If your total foreign tax paid for the year is $1,000 or less, you enter it directly in your return. Above $1,000 you work through the offset limit calculation.
• A double-tax treaty does not, on its own, remove the Australian tax — it generally preserves Australia’s right to tax its residents on worldwide gains. The treaty may affect what the other country can charge; the offset does the double-tax relief work here.

Can the overseas property be exempt as your main residence?

Sometimes — and the conditions are strict. Where the property was genuinely your home before you moved to Australia, the ATO has confirmed (Taxation Determination TD 95/7) that you can choose to keep treating it as your main residence during your absence, disregarding the gain. But it must have been your home first (a property rented out from day one does not qualify); if it was rented while you were away, the choice covers up to 6 years of absence (unlimited if it sat vacant or family lived there rent-free); and while the choice applies, no other property can be your main residence — apart from up to 6 months of overlap when moving. If you bought a home in Australia in the meantime, it is a this-or-that trade-off: exempting the overseas sale means the Australian home was not your main residence for the same period. TD 95/7’s own example is a UK resident who moved to Australia, rented out her UK home, bought nothing here, and sold the UK home the next year — her choice meant the gain was disregarded entirely. Run the numbers both ways before choosing.

The traps nobody warns you about

Trap 1: Leaving Australia triggers a deemed sale

Residency cuts both ways. If you stop being an Australian resident while still owning the overseas property, CGT event I1 treats you as having sold it and re-acquired it at market value on the day you left — crystallising a gain you never actually realised. You can elect to disregard that deemed disposal, keeping the property inside the Australian CGT net until you genuinely sell. Make the election in the year you leave; forgetting it exists is how phantom tax bills are born. (The mirror image is covered in our guide to CGT for non-residents.)

Trap 2: The 1 July 2027 reform boundary

From 1 July 2027, the 50% CGT discount is being replaced by cost-base indexation plus a 30% minimum tax on real capital gains — and the contract date decides which regime your sale falls under. Take Meera’s $348,866 gain: a contract signed in May 2027 keeps the 50% discount ($55,819 tax). Signed in August 2027, the discount is gone and indexed real gains face a 30% minimum. On a large gain that difference is not small. If an overseas sale is on the cards, the contract date is now a tax-planning decision. Full breakdown: CGT reform from 1 July 2027.

Trap 3: “The money never came to Australia”

Irrelevant. Australian residency taxes the gain, not the remittance. Proceeds sitting in a London, Mumbai or Shanghai bank account are fully taxable here. This myth survives because it used to be true in some other countries’ systems — it has never been true in Australia’s.

Trap 4: Selling just after you arrive

Bought a flat in 2014, moved to Australia in September 2026, signed a sale contract in May 2027? The discount clock started in September 2026 — under 12 months, so no 50% discount, despite a decade of real ownership. The full gross gain (in AUD) lands in your return. Where a sale can wait a few months to cross the 12-month mark, the saving is half the tax on the gain.

Common mistakes on overseas property sales

• Using the original purchase price instead of the market value on the day you became a resident. This understates the cost base and overstates the gain.
• Converting everything at one rate — year-end, average, or the rate when the money arrived. Each amount gets its own date.
• Forgetting the discount clock restarted when you moved here.
• Assuming the main residence exemption is automatic for a property you once lived in — it requires an active choice, and it trades off against any Australian home you owned in the same period.
• Claiming the whole foreign tax bill as an offset — the offset is capped at the Australian tax on the gain; excess foreign tax is lost, not refunded.
• Missing the contract date — signing in June vs July decides which income year the gain lands in, and from 2027, which CGT regime applies.

Records to gather before you lodge

1. Your residency timeline: the date you became an Australian resident for tax purposes, and your visa history.
2. The sale contract — signed date and price in the foreign currency.
3. Evidence of market value on the day you became a resident (valuation or comparable sales), or the original purchase contract if you were already a resident when you bought.
4. Buying and selling costs with dates, plus capital improvements made after you became a resident.
5. The exchange rate for each of those dates, how the property was used while you lived here, and overseas tax documents for any tax paid on the sale.

In myTax, the sale goes at Item 18 (Capital gains) — tick “You had a CGT event” — and foreign tax paid is claimed in the foreign income section, with the offset limit worksheet kicking in once total foreign tax for the year exceeds $1,000.

FAQ: CGT on overseas property

I sold my flat in India this year. Do I have to declare it in Australia?

Yes, if you were an Australian resident for tax purposes (and not a temporary resident) when you signed the sale contract. A contract signed between 1 July 2026 and 30 June 2027 belongs in your 2026-27 return, even if settlement happens later.

I bought the property years before moving to Australia. What cost do I use?

Usually the market value on the day you became an Australian resident for tax purposes — the deemed acquisition. Your original purchase price is irrelevant (unless you were already a resident when you bought).

The price barely moved in the local currency. Why do I have a gain in AUD?

Because the gain is measured in Australian dollars after converting each amount at its own date’s exchange rate. If the AUD weakened between your residency date and the sale date, a flat local price becomes a taxable Australian gain — see Mei’s ¥2,000,000 example above: same yuan price, A$25,521 gain.

The other country already taxed the sale. Do I pay tax twice?

Generally no — the foreign income tax offset reduces your Australian tax on the same gain. But it is capped at the Australian tax on the gain, so a higher foreign tax leaves the excess lost. Only foreign income tax counts, and you need the overseas assessment as evidence.

I was on a temporary visa when I sold. Am I still liable?

Generally no. Temporary residents are taxed on capital gains like foreign residents — only taxable Australian property is caught. But the definition is precise (temporary visa and neither you nor your spouse is an Australian citizen or permanent resident), so confirm you genuinely met it for the whole ownership period.

Does the 1 July 2027 CGT reform affect my overseas property?

If your sale contract is signed on or after 1 July 2027, the 50% discount is replaced by cost-base indexation plus a 30% minimum tax on real gains — the same as for Australian property. Gains accrued before that date keep the discount treatment, so the contract date is doing real tax-planning work now. Read the full reform breakdown before you sign anything in 2027.

The bottom line

An Australian resident who sells property overseas reports the gain here: starting from the market value on the day they became a resident, with every amount converted to Australian dollars on its own date. A flat price in the local currency can still mean an Australian gain, the 50% discount clock starts when you arrive — not when you bought — and foreign tax paid only offsets up to the Australian tax on the gain. Get the residency date, the valuation, the exchange rates and the contract date right, and the rest is arithmetic.

Sources: ATO, “Capital gains on overseas assets” (QC 45588); ATO community guidance on CGT and overseas property; the exchange-rate examples use illustrative RBA-style rates. This article is general information, not personal tax advice — cross-border sales with large gains are worth a registered tax agent’s review.