Foreign Residents and CGT on Australian Property: Where the Valuation Comes In

Most of the foreign-resident CGT calls we take start with the same realisation: “I’m an Australian living overseas — I didn’t think I’d pay capital gains tax on my old home in Sydney.” For a lot of expats and overseas owners, that assumption is now wrong, and the gap can be expensive.

Two changes drive it. Here is how they work, and where a valuation usually enters the picture.

What is a foreign resident for CGT purposes?

A foreign resident for tax purposes, in the context of Australian CGT, generally cannot claim the main residence exemption when selling property they once lived in. From 1 January 2025, a further rule applies: the buyer must withhold 15% of the sale price and remit it to the ATO, on every sale regardless of price.

Change one: no main residence exemption

If you are a foreign resident for tax purposes at the time you sell, you generally cannot claim the main residence exemption — even on a property you once lived in as your home. The concession was wound back for anything acquired from 9 May 2017, with a transitional window that closed on 30 June 2020. A narrow “life events” exception aside, the gain that an Australian resident would shelter is, for a foreign resident, simply taxable.

In practice this catches Australians who moved to Singapore, Hong Kong, London or the Gulf and held onto the family home or an investment apartment, expecting the exemption to still be there when they sold. The rule is national, so a Gold Coast holiday unit or a Perth rental owned from abroad is caught the same way as a Sydney or Melbourne apartment.

Change two: 15% withheld at settlement

Then there is the foreign resident capital gains withholding. From 1 January 2025, a buyer must withhold 15% of the sale price and send it to the ATO when they buy Australian property from a foreign resident — and the previous $750,000 threshold is gone, so it now applies to every sale regardless of price.

Australian-resident sellers get around this by handing the buyer a clearance certificate. Foreign residents cannot obtain one, so 15% of the gross price is held back at settlement. You reconcile it later when you lodge your return — claiming a credit, and a refund if too much was withheld — but in the meantime it is real money tied up, calculated on the full price rather than the actual gain.

Where the valuation comes in

A defensible figure does a few jobs here:

• Establishing the cost base. The withholding is on the price, but the tax is on the gain. To work out the real gain — and to support a request to vary the 15% down towards the actual liability — you need a sound cost base. For property acquired long ago, inherited, or first used to produce income, that often means a retrospective market valuation.
• Non-arm’s-length dealings. If the property changes hands other than at market price — say, transferring a half-share to a family member while you are overseas — the ATO substitutes market value for the price. That is a related-party transfer valuation, and getting it right is what keeps the figure defensible.
• Knowing the number before you commit. The CGT calculator and a current market valuation let you see the shape of the liability before you sign anything.

What to do

• Confirm your tax residency for the sale year. It is your residency status at the time of the CGT event that decides the exemption — not where you were when you bought.
• Plan for the 15% upfront, and ask your accountant whether a withholding variation is worth lodging.
• Get the cost base evidenced with a valuation, especially for older, inherited, or formerly-occupied property.

If you are selling Australian property from overseas, a valuation tied to the right date is usually the cheapest way to make sure you are taxed on the actual gain and not an inflated one. You can request a quote — and if you are on the buying side instead, our guide to foreign buyer rules and surcharges covers that end.

Frequently asked questions

Do foreign residents pay capital gains tax when they sell Australian property?

Generally, yes. If you are a foreign resident for tax purposes when you sell, you cannot claim the main residence exemption — even on a property you once lived in as your home. The gain an Australian resident would shelter is, for a foreign resident, simply taxable. A narrow “life events” exception aside, there is no concession to fall back on.

When does the main residence exemption stop applying to foreign residents?

The concession was wound back for anything acquired from 9 May 2017, with a transitional window that closed on 30 June 2020. Since then, a narrow “life events” exception aside, a foreign resident selling property they once lived in cannot shelter the gain the way an Australian resident could. It is your residency at the time of sale that decides this.

How much is withheld at settlement when a foreign resident sells?

From 1 January 2025, the buyer must withhold 15% of the sale price and send it to the ATO. The previous $750,000 threshold is gone, so it now applies to every sale regardless of price. Australian-resident sellers avoid this by giving the buyer a clearance certificate; foreign residents cannot obtain one, so 15% of the gross price is held back.

Can I get the 15% withholding back if it is more than my actual tax?

The withholding is calculated on the full sale price, not the actual gain, so it is often more than the tax owed. You reconcile it when you lodge your return — claiming a credit, and a refund if too much was withheld. You can also ask your accountant whether lodging a withholding variation, to bring the 15% down towards the real liability, is worthwhile.

Why do I need a valuation to sell Australian property from overseas?

The withholding is on the price, but the tax is on the gain — and to work out the real gain you need a sound cost base. For property acquired long ago, inherited, or first used to produce income, that often means a retrospective market valuation. A defensible figure also supports a request to vary the 15% down towards your actual liability.

---

Sources

• ATO — Foreign residents and capital gains tax
• ATO — Foreign resident capital gains withholding overview

Last verified 10 June 2026. This is general information, not tax advice; confirm how the rules apply to your situation with your accountant or the ATO.