The proposed changes to Capital Gains Tax (CGT) laws have many expat home owners feeling nervous, particularly those who have their main residence in Sydney and have owned it for some time.

How could the proposed changes affect you or your family? As of January 2019, here is a rundown:

Current CGT exemptions

For many years, Australians who live abroad have not have to pay CGT on their family home/main residence in Australia. This meant if you got a job offer overseas, you could take it up without your home being treated as an investment for tax purposes if you sold it.

Current CGT exemptions give Australian expats the option to relocate for work without first having to sell their home. If, for example, they decide after five years they wish to stay overseas and purchase a home there, the sale of their Australian property is CGT free.

Proposed new laws

In the 2017-18 Budget, the government announced overseas residents will no longer be entitled to claim the main residence CGT exemption when they sell their property in Australia.

At present, this is not yet law but it is expected to be raised in parliament early in 2019. If the law is passed by the Senate and you are working overseas or living abroad as a retiree when you sell your home in Australia, you may no longer be entitled to claim the main residence exemption (MRE).

What’s more, the tax bill you receive when you sell your property could be back-dated to the time you made the purchase, not the date when you left and moved overseas. For many Australian expats, this means a large bill, which they would not have planned for when they relocated.

Several lobby groups are pushing for the government to drop this proposal, saying it is unfair to Australians who are currently living overseas and could serve to push them out of the local property market. It could also impact the decisions of Australians who are offered the opportunity to work abroad.

What this means for you as an expat

This bill is yet to be debated in Parliament, but if it is passed there will be a six-month grace period allowing expat homeowners to sell without being hit with Capital Gains Tax.

If you live overseas and own property here in Sydney or around Australia, you may understandably feel nervous. Should the bill go ahead, you’ll have a limited time period to sell. There may be a flood of properties on the market during this period as other families scramble to offload a property that could become a tax liability.

Being prepared for this change may be a matter of speaking to your financial advisor and gaining an understanding of the tax you will face when you sell. It could be that you’ll still come out on top financially, although less than before.

Ahead of the law being passed, now is also a good time to have a chat with your real estate agent. Should the bill go through and you decide to sell during the six-month grace period, you’ll need to act quickly. You should have a good idea of the value of your property and what is needed to bring it up to a sale-ready standard.

Selling a house can be a drawn-out process, especially if you are starting from scratch or you’re in a buyers’ market. Being aware of these proposed changes ahead of time and thinking about the moves you will take, should CGT exemption go through, could save you from being stung financially on the sale of your property.

To find out more about the CGT exemption, click on the links below to visit information pages from the ATO:

Capital Gains Tax

Foreign residents and main residence exemption

Your main residence

Your home and other real estate

Copy by Jonathon De Brennan.

Hazelnut Raisin Chocolate Brownie

Serves 12-14

250g salted butter, melted

2 tablespoons olive oil

250g dark brown sugar

200g caster sugar

4 eggs

3 teaspoons vanilla extract

150g (1 cup) plain flour, sifted

100g Dutch cocoa powder, sifted

100g dark chocolate, coarsely chopped

100g roasted hazelnuts, roughly chopped

100g raisins

Salt flakes, to sprinkle

Preheat oven to 180C. Lightly grease and line a 20cm x 30cm slice tin with baking paper. Combine the butter, oil and sugars in a large bowl. Whisk in the eggs and vanilla until well combined. Add the flour, cocoa, chocolate, hazelnuts and raisins and stir until well combined. Spoon into tin, sprinkle with salt and bake for 40-45 minutes or until just firm to touch. Remove from oven, place the tin on a wire rack and cool to room temperature. Cut into pieces to serve.

Note: if you prefer a firmer brownie, refrigerate brownie before cutting until chilled and firm.

Image and Styling: Kirsten Jenkins

CHARMING SINGLE LEVEL HOME WITH PARKING IN PICTURESQUE PARKSIDE LOCATION

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GRAND 3 BEDROOM RESIDENCE WITH SELF CONTAINED APARTMENT – MOMENTS TO DOUBLE BAY VILLAGE

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