What happens to my Australian property when I move overseas?

You don’t have to give up on the Australian dream of owning a property just because you’re moving overseas. With proper planning, you can maintain your expatriate lifestyle as well as fulfill your Australian property ambitions. There may also be a few tax benefits along the way!

Negative gearing

Firstly, any rental losses incurred while you’re living overseas can be accumulated and offset against your assessable income when you return to Australia. This can include reducing your salary income when you recommence employment in Australia or reducing any capital gains when you sell the property in the future.

You only pay tax on your rental profit

When you’re living overseas, it’s only your Australian income that’s subject to tax. But, even though you may pay tax on your rental profits, it will usually be at a much lower marginal rate than if you were living and working back in Australia.

50% Tax Discount

You must be living in Australia to be eligible for a 50% discount on tax on the sale of your property. As an expatriate, you will still be eligible for a reduction of your tax, but it will be apportioned for any time you were living overseas during the ownership period of your property.

Main Residence Exemption

Generally, you don’t pay tax on the sale of your home. This is also the case for expatriates, but with a catch. The exemption will only apply, if at the time you sell the property, you are back in Australia and living in that property. Further, the exemption may only be proportionately available based on the time that you actually lived in that property.

Importantly, if the property was your home before you left Australia, you may also still be eligible to treat the property as your main residence for a further 6 years whilst you’re living overseas, again only if you return to live in the property before it is sold.

In addition to managing Australia’s complex tax rules generally, the main residence exemption is where there is usually a lot of planning to ensure the maximum tax-free amount is obtained on the property’s eventual sale.

If you’d like some assistance with your taxation, reach out to Dean Crossingham,

Head of Accounting at Stanford Brown.

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