If you sell Australian property while you’re a foreign resident for tax purposes, three rules hit you at once — and most expats only discover the first on settlement day, when $135,000 of a $900,000 sale price doesn’t reach them. This guide explains the 15% foreign resident capital gains withholding, the two CGT concessions you lose as a non-resident, and how to claim the withheld amount back. Every figure is checked against the ATO’s current published guidance for 2026–27.
The short answer
When a foreign resident sells Australian real property:
- The buyer withholds 15% of the sale price at settlement and pays it to the ATO. For contracts signed on or after 1 January 2025 there is no minimum threshold — every sale at any price is caught. It’s a withholding, not a final tax; you claim it as a credit in your tax return.
- You cannot claim the main residence exemption if you are a foreign resident at sale time (disposals after 30 June 2020), unless you pass a narrow “life events” test. The years you lived in the home as a resident don’t save you.
- You don’t get the 50% CGT discount on growth that accrued while you were a foreign resident (assets bought after 8 May 2012). Only an apportioned discount for days you were an Australian resident after that date.
One date controls almost everything here: the contract date. The old withholding rules (12.5% on $750,000+ sales) still apply to contracts signed before 1 January 2025, even if they settle later — and your return year is the contract year, not the settlement year.
Withholding: old rules vs new rules
The regime has been tightened twice, and plenty of online advice still quotes the old numbers. Get your contract date into the right row:
| Contract date | Rate | Threshold |
|---|---|---|
| 1 Jul 2016 – 30 Jun 2017 | 10% | $2 million+ |
| 1 Jul 2017 – 31 Dec 2024 | 12.5% | $750,000+ |
| On or after 1 Jan 2025 | 15% | None — every sale |
The 15% applies to the market value — for an arm’s-length sale, the contract price — not your gain. On a $900,000 sale the buyer holds back $135,000 even if your actual gain is only $50,000. The ATO owes you the difference once your return is assessed.
It’s broader than houses: residential and commercial property, vacant land, leases over Australian real property, mining/quarrying/prospecting rights, indirect real-property interests (with a right to occupy), and options or rights to acquire any of these. Excluded: approved stock-exchange transactions, securities lending, and vendors in external administration. The ATO’s FRCGW overview lists every asset type caught.
What happens on settlement day
- The buyer must withhold unless you prove otherwise. No clearance certificate or variation notice in the buyer’s hands at or before settlement = 15% withheld. This catches genuine Australian residents who forgot to apply, too.
- It runs through the settlement platform. Typically a PEXA financial settlement direction routes the withheld amount to the ATO, shown as its own line on the settlement statement. The buyer remits on or before settlement day.
- Buyers face penalties for failing to withhold — which is why conveyancers enforce it strictly.
- The credit lands in your contract-year return. Individuals claim it at question 18, label X of the supplementary return (trusts: item 21 label B; companies: label H8). If the credit exceeds your tax, the balance is refunded — after the return is assessed, which takes months.
A vendor declaration (a written statement that you’re a resident) cannot avoid withholding on a real property disposal — real property needs a clearance certificate. False declarations attract penalties of up to 120 penalty units.
Clearance certificates: apply early, not after exchange
- Apply the moment you decide to sell. Certificates take up to 28 days and last 12 months, so they can comfortably pre-date your listing. It’s free.
- Every person on the title needs their own — joint applications don’t exist.
- It must reach the buyer at or before settlement. A certificate issued the day after is worthless for that sale.
- Miss it and 15% of the price is held up. On $900,000 that’s $135,000, refundable only after your contract-year return is assessed.
Foreign-resident vendors can’t get clearance certificates but can seek a variation notice reducing the rate to anywhere from 0% to 14.99%. Grounds that work: a small or zero gain, a capital loss, or no Australian tax liability on the disposal. Apply as soon as the contract is signed with the contract and title documents, at least 28 days before settlement — and get all tax lodgements up to date first, or the application stalls.
Worked example: Daniel sells his Brisbane unit
Daniel is an Australian citizen, a foreign resident for tax purposes since moving to Singapore in 2023. He sells his Brisbane investment unit in November 2026:
- Sale price: $900,000 (contract 15 Nov 2026, settles Jan 2027)
- Bought 2015 for $600,000; selling costs $25,000
- Capital gain: $900,000 − $600,000 − $25,000 = $275,000
Withholding at settlement: contract after 1 Jan 2025 → buyer withholds 15% × $900,000 = $135,000. Daniel receives $765,000.
CGT discount: bought after 8 May 2012, so the discount is apportioned — 50% × (resident days after 8 May 2012 ÷ total days from 8 May 2012 to sale). Daniel was resident for most of the ownership period, so it works out to roughly 35% here (get the exact day count from your accountant). Net gain ≈ $275,000 − $96,250 = $178,750.
The tax: non-residents have no tax-free threshold — 30c to $135,000, 37c to $190,000, 45c above (the ATO’s latest published non-resident table is the 2025–26 edition; the 2026–27 edition had not been re-published at the time of writing). No Medicare levy for foreign residents. On $178,750: 30% × $135,000 = $40,500 plus 37% × $43,750 = $16,187.50 → $56,687.50.
The refund: $135,000 withheld against a $56,687.50 liability — roughly $78,300 comes back once the 2026–27 return is assessed. A variation notice at ~6.3% ($56,688 ÷ $900,000) would have matched the settlement-day cash flow to the real liability — exactly what the variation system is for.
The lesson: 15% of the price is almost always far larger than the tax on the gain. The system assumes the worst and refunds the difference.
The main residence exemption: gone for foreign residents
Dispose of the property as a foreign resident after 30 June 2020 and you cannot claim the main residence exemption at all — not partially, not apportioned to the years you lived there. A 12-year family home sold from overseas is fully taxable.
The only exception is the life events test: you were a foreign resident for a continuous period of six years or less, and during that period you, your spouse, or a child under 18 suffered a terminal medical condition or died — or you entered a formal agreement on a marriage or relationship breakdown.
Old grandfathering (holdings before 7:30pm AEST 9 May 2017, sold by 30 June 2020) is closed — see the ATO’s page on the main residence exemption for foreign residents. For the resident-side rules — the 6-year absence rule, moving between homes — see our main residence exemption guide and the 6-year rule explainer.
The 50% discount, apportioned
For assets acquired after 8 May 2012: discount % = 50% × (days as an Australian resident after 8 May 2012 ÷ days from 8 May 2012 to the CGT event). Only pre-9 May 2012 growth keeps a full discount. Buy as a non-resident and never live here during ownership? The discount is zero and the whole gain is taxed at full non-resident rates.
The day-count is where DIY filers go wrong — it’s your actual residency status day by day, not your citizenship or visa label. Our 50% discount guide covers the resident mechanics, and the cost base guide shows how to maximise the figure it applies to.
The “I moved overseas after buying” trap: CGT event I1
When you stop being an Australian resident, CGT event I1 triggers a deemed disposal of assets that aren’t taxable Australian property — shares, ETFs, crypto — at market value on the day residency ends. Real property is exempt (it stays in the Australian CGT net).
You can elect under section 104-165 to disregard the deemed gain or loss; the assets then become taxable Australian property until sold or until residency resumes. No separate notification — the return as lodged evidences the choice. It’s a one-way-feeling decision made on paper at the worst possible time (emigration), which is why most people first hear of it from an accountant years later.
New from 1 October 2026: the regime just got tougher
The Strengthening the Foreign Resident CGT Regime measure commenced 1 October 2026 — ten days before this article. In plain English:
- “Real property” has a statutory definition: land, rights and interests relating to land, assets fixed to land (wind turbines, solar panels, mining equipment), leases and licences over them. Water rights are included too.
- The principal asset test is now measured over 365 days, not at a point in time — no more restructuring just before sale.
- Pre-settlement notification: foreign vendors declaring a disposal isn’t an indirect Australian real property interest, on transactions of $50m+ (including related transactions), must notify the ATO at least 28 days before settlement.
- Buyers must consider whether they reasonably believe a vendor declaration is false, any time before settlement.
- Transitional concession: eligible foreign residents disposing of certain renewable energy assets (1 Oct 2026 – 1 Jul 2040) keep a 50% CGT discount.
Mostly this bites large, complex transactions — but the broadened definition matters if your sale involves anything beyond a straightforward house or unit. The ATO’s detail page on the measure has the full legislative breakdown.
Two companion traps
Vacant land is the worst of both worlds. Since 1 July 2019 you can’t deduct holding costs for vacant land — no interest, no rates, no maintenance, even for land bought earlier (narrow exceptions for companies, businesses, primary producers). And a vacant-land sale is still caught by FRCGW: costs you can’t deduct, proceeds the buyer withholds from.
Your home country will tax it too. Australia’s double tax agreements (UK, US, Japan, Singapore, France and 40-plus others) preserve Australia’s primary taxing right over Australian real-property gains. Your country of residence typically grants a foreign tax credit for the Australian tax paid — keep immaculate records of what was withheld and when. Treaty specifics vary: get advice.
Frequently asked questions
I’m an Australian citizen living in Singapore — the 15% can’t apply to me, can it?
It can. The regime cares only about tax residency, not citizenship. A citizen who is a foreign resident for tax purposes is caught like any other non-resident: no clearance certificate, 15% withheld unless a variation notice reduces it.
Is the 15% taken from my gain or the sale price?
The sale price — the most misunderstood fact in the regime. On a $900,000 sale with a $50,000 gain, $135,000 is withheld: nearly three times the gain. The excess comes back as a credit/refund after your contract-year return is assessed.
My contract was signed in December 2024 but settles in 2025 — which rules apply?
The contract date governs. Signed before 1 January 2025, the old rules apply (12.5% on $750,000+ sales) even with a later settlement — and the credit belongs to the contract year’s return.
I lived in the house 12 years before moving overseas. Doesn’t the exemption cover those years?
No. A foreign resident disposing after 30 June 2020 (outside the life events test) gets no exemption on the entire gain, including the resident years. This generates the biggest unexpected bills in expat forums.
I held the property 15 years — I get the 50% discount, right?
Only apportioned: 50% × (resident days after 8 May 2012 ÷ total days since 8 May 2012). Growth while foreign-resident gets no discount; a non-resident for the whole ownership period gets zero.
How long until I get the withheld amount back?
Only after the ATO assesses the return for the contract year — months after lodgement, with no fast-track release. A variation notice up front beats waiting for a refund.
What to do before you sign anything
Run the numbers on our CGT calculator, then: (1) confirm your tax residency for the contract year; (2) residents — apply for a clearance certificate the day you decide to sell; (3) foreign residents — discuss a variation notice with your conveyancer before exchange, with 28+ days to settlement; (4) diarise the contract date — it fixes the withholding rules, the return year and the discount apportionment; (5) keep every withholding receipt for the home-country foreign tax credit. For the broader picture, see our complete CGT on property guide and the inherited property guide.
Figures from the ATO’s published guidance as at October 2026. Residency and treaty questions turn on individual facts — get personal advice before you sign.
