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Removal of Capital Gains Tax (CGT) discount for Expat Aussies – What you should know



In the ‘busy-ness’ of living overseas and owning a property back home, many expat Australians may have missed the fact that they are no longer entitled to a 50% Capital Gains Tax discount on Australian taxable property.  This was announced on Federal Budget Night, back on the 8th of May 2012, and many Aussies are still unaware of the implications.

 

What does this mean?

What this essentially means is that if you live overseas and your property has been held for more than 12 months, any gains that have occurred since the 8th of May 2012 and up to the date of sale of the property, or up until your permanent re-entry date, will be taxed at 100% instead of the previous 50%.

As a non-resident or expatriate investor, you now have two choices.  You can either;

  1. Pay CGT on the full amount of any capital gain made on the sale of the Australian property without access to the 50% CGT discount concession.
  2. Engage a certified practicing valuer to obtain a market valuation of the property as at 8 May 2012 and claim partial 50% CGT discount concession.

Certified Practicing Valuers are listed on the Australian Property Institute website – search in the category ‘Property Valuation’ and by suburb for someone with the CPV qualification.

 

Why obtain a property valuation?

Even if you are not an expat Australian, it is always a good idea to obtain an accurate independent property valuation.  This is a particularly important task to complete when you either move out of a property you have been living in and rent it out to a private tenant (which usually happens when an Australian goes to live and work overseas), refinance the property or need to maximise your taxation concessions.

The other benefit of obtaining a current property valuation is that the property can be insured for the right amount.  Some valuers and Quantity Surveyors (listed at the Australian Institute of Quantity Surveyors) are able to prepare an up to date depreciation schedule which may also provide other tax incentives.  During this process, your valuer may make other recommendations and as property is usually a large part of your investment portfolio, it may be time to schedule an up to date consultation with your licensed financial planner or personal accountant.

 

For more information, visit the ATO website, Minister’s Media Release, briefing from Holding Redlich or use the ATO CGT Calculator.