How the exemption works for foreign residents
If you are a foreign resident, you are not entitled to the main residence exemption from capital gains tax (CGT) for property sold after 30 June 2020, unless you satisfy the requirements of the life events test.
If you don't meet the life events test, you aren't entitled to any main residence exemption, even if you were a resident for some of the ownership period.
Only foreign residents who sold property prior to 30 June 2020 may be eligible for the main residence exemption.
If you are an Australian resident at the time you dispose of your property this does not affect you.
Life events test
When you dispose of your residential property, you satisfy the requirements of the life events test if both of the following are true:
- you were a foreign resident for tax purposes for a continuous period of 6 years or less
- during that period, one of the following occurred
- you, your spouse or your child under 18 had a terminal medical condition
- your spouse or your child under 18 died
- the CGT event happened because of a formal agreement following the breakdown of your marriage or relationship.
If you satisfy both these criteria and meet the general requirements for the exemption, you can:
- claim the main residence exemption
- use the exemption as a reason to vary the capital gains withholding that would otherwise apply to your property.
Disposal of property by 30 June 2020
You do not need to apply the life events test to a property that you:
- acquired before 7:30 pm (Canberra time) on 9 May 2017, and
- disposed of by 30 June 2020.
You can claim the main residence exemption if you meet both of these requirements in addition to the general requirements for the exemption.
If you were not an Australian resident for tax purposes while living in your property, you are unlikely to meet the requirements for the CGT main residence exemption.
If you dispose of your property under a contract, the disposal time is when you enter into the contract. If there is no contract, the disposal time is when you settle.
Effects on your deceased estate
If you are a foreign resident for tax purposes when you die, these rules also apply to:
- legal personal representatives, trustees and beneficiaries of your deceased estate
- surviving joint tenants
- special disability trusts.