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Foreign Resident Capital Gains Withholding & Expat CGT

Q: What is a foreign resident capital gains withholding clearance certificate?

It is a free certificate from the ATO confirming you are an Australian resident for tax purposes, so no foreign resident capital gains withholding needs to be withheld from your sale. You apply online before settlement; certificates are usually issued quickly but can take up to 28 days and are valid for 12 months.

Q: Can I still claim the main residence exemption as an expat?

Usually not. If you are a foreign resident on the day you sign the sale contract, you generally lose the exemption entirely, not even apportioned for resident years, unless a narrow life-event exception applies within six years of becoming a non-resident, where the event causes the sale.

Q: What happens to my assets when I leave Australia?

If you were a permanent resident or citizen, you are treated as having disposed of your assets that are not taxable Australian property at market value on the day you cease residency (CGT event I1), and the 50% discount still applies to the resident part of any gain. You can choose to pay CGT then, or elect to keep those assets in the Australian net and defer until you actually sell. Real estate is excluded and stays taxable here. Temporary residents are not subject to CGT event I1 on departure.

Published June 25, 2026 Updated June 25, 2026 by Eduyush Team

Expats and Australian property: the CGT rules that catch people leaving

Leaving Australia changes how your property is taxed in ways that surprise almost every expat. Your home can lose its CGT exemption entirely. The 50% discount shrinks for the years you're away. And from 2025, every property sale — even by residents — triggers foreign resident capital gains withholding of 15% unless you produce a clearance certificate. This guide maps the journey from the day you leave to the day you sell.

General information only. Residency for tax purposes is a question of fact and is not the same as your visa or citizenship. This is not personal advice — speak to a registered tax agent before you leave or sell.

What is foreign resident capital gains withholding?Foreign resident capital gains withholding (FRCGW) is a tax collected at settlement when Australian property is sold. From 1 January 2025 the rate is 15% of the sale price with no value threshold, so it applies to every property sale. The seller stops it by giving the buyer a foreign resident capital gains withholding clearance certificate from the ATO before settlement; without one, the buyer must withhold 15% and pay it to the ATO.

Two things that never leave the tax net

Australian real estate is taxable Australian property. Unlike shares, it stays inside Australia's CGT net no matter where you live — so a foreign resident always pays CGT on an Australian property gain. The two levers that change are your discount and your main residence exemption, and both move against you once you become a non-resident.

Resident — full concessions Non-resident — discount lost Exemption can vanish

Choice point

1. The day you stop being a resident

CGT event I1 — deemed disposal

When you cease being an Australian tax resident, you're treated as having sold all your assets that aren't taxable Australian property at market value that day. Real estate is excluded (it stays taxable here), but you get a choice on your other assets: pay CGT now on the deemed sale, or elect to keep them in the Australian net and defer until you actually sell. Where you pay now, the 50% discount still applies to the part of the gain that accrued while you were a resident — departure doesn't wipe out the discount you've already earned.

Temporary residents are different: if you were a temporary resident (for example, on a working visa) rather than a permanent resident or citizen, CGT event I1 does not trigger on departure. Temporary residents aren't subject to CGT on assets that aren't taxable Australian property in the first place, so leaving doesn't create a deemed disposal for them.

Watch-out: property isn't deemed-sold on departure — but the clock on your concessions starts the moment you become a non-resident.

"Leaving flips a switch on your portfolio: everything but the bricks is treated as sold at the airport. The house stays behind — and so does its tax bill."

Discount lost

2. The 50% discount shrinks while you're away

No discount for the non-resident period

Resident — 50% discount

Non-resident — no discount

Years in Australia

Years overseas

Since 8 May 2012, foreign and temporary residents lose the 50% CGT discount for the portion of the gain that accrues while they're non-resident. The discount is apportioned — you keep it for your resident days and lose it for your non-resident days — so a long stint overseas can materially lift the tax on an eventual sale.

"The half-price discount is a residents' loyalty card. Every year you're away, fewer of your gain's days qualify for the swipe."

The cliff

3. Selling your home while a foreign resident

Main residence exemption — all or nothing

Whole gain taxable — no exemption at all

Even the years you lived there as a resident

This is the harshest rule in Australian CGT. If you're a foreign resident on the day you sign the sale contract, you generally get no main residence exemption at all — not even apportioned for the years it was genuinely your home as a resident. It's a cliff, not a slope. Residency on contract day decides the whole outcome.

The narrow escapes: a property held before 7:30pm on 9 May 2017 and sold by 30 June 2020 kept the exemption under transitional rules (now expired for most). Otherwise, only certain life events within a continuous six years of becoming a non-resident preserve it — and the event must be the reason the sale happens, not merely something occurring around the same time: a terminal medical condition affecting you, your spouse or child under 18 that leads to the sale; the death of your spouse or child under 18; or a CGT event arising from a formal court-ordered or binding property settlement following the breakdown of a marriage or de facto relationship. Because the causal test is easily misread, confirm eligibility with a tax agent before relying on it.

"Residency on contract day is a switch, not a dial. Flip it the wrong way and the entire exemption disappears — including every year you actually lived there."

Cash-flow hit

4. Foreign resident capital gains withholding: 15% on every sale

FRCGW and the clearance certificate

From 1 January 2025, foreign resident capital gains withholding (FRCGW) is 15% of the sale price, and the old $750,000 threshold is gone — so it applies to every property sale. The buyer must withhold 15% and remit it to the ATO unless the seller hands over a foreign resident capital gains withholding clearance certificate before settlement. That means even an Australian resident selling their own home must get a clearance certificate, or watch 15% of the price disappear at settlement and chase it back through their return.

Australian residents apply for the clearance certificate free through the ATO — the clearance certificate application is online, and certificates are usually issued quickly but can take up to 28 days, so lodge it as soon as the property is on the market. The certificate is valid for 12 months and can cover multiple sales in that window.

If you're a genuine foreign resident: you can't get a clearance certificate, so 15% is withheld as a prepayment against your actual CGT and reconciled when you lodge. If 15% of the price far exceeds the tax on your gain, apply for a variation to reduce the amount withheld — otherwise you're lending the ATO cash until your return. The buyer reports and pays the withheld amount using a purchaser payment notification.

"The clearance certificate is your residency passport at settlement. Forget it and the buyer is legally obliged to skim 15% off the top before you see a dollar."

Planning lever

5. Timing the sale around your residency

The contract date is everything

Because the main residence exemption and the discount both hinge on your status at the contract date, the single biggest lever is when you sign. Selling while still an Australian resident — or before you leave — can preserve an exemption that would vanish entirely a month later as a non-resident. The reverse trap: returning to residency before selling can restore access to concessions.

"The contract date is the photo finish. Cross the line as a resident and you keep the prize; cross it as a foreign resident and you forfeit it."

The checklist: before you leave, before you sell

Confirm your tax residency status — it turns on facts, not your visa or passport, and it's tested at the contract date.
If you can, sign the sale contract while still an Australian resident to preserve the main residence exemption and full discount.
Get a market valuation of your home the day you leave, so any future apportionment has a defensible figure.
On departure, decide on your non-real-estate assets: pay CGT now on the deemed disposal, or elect to defer and keep them in the Australian net.
Remember real estate always stays taxable in Australia — leaving doesn't take it out of the net.
Factor in the lost discount for your non-resident years when you model the eventual gain.
Check whether a six-year life-event exception could preserve your exemption if you must sell while overseas.
Confirm whether you're a permanent or temporary resident — temporary residents aren't hit by CGT event I1 on departure, so this whole departure-disposal step may not apply to you.
Apply for an ATO foreign resident capital gains withholding clearance certificate well before settlement — even as a resident — or 15% of the price is withheld.
If you're a foreign resident, plan for the 15% FRCGW as a cash-flow event, and consider a withholding variation if 15% of the price overshoots the tax on your gain.

Quick reference

Situation	CGT outcome	Key date
You cease Australian residency (permanent resident or citizen)	Deemed disposal of non-property assets (with a defer choice); 50% discount kept for resident period	Day you become non-resident
You cease residency as a temporary resident	No CGT event I1 on departure for non-TAP assets	Day you leave
You sell Australian property as a non-resident	Always taxable — it's taxable Australian property	Contract date
The 50% discount	Lost for your non-resident period (apportioned)	From 8 May 2012
Selling your home as a foreign resident	No main residence exemption (rare life-event exceptions)	Contract date
Any property sale (foreign resident capital gains withholding)	15% withheld unless a clearance certificate is provided	From 1 January 2025

Frequently asked questions

Do I pay Australian CGT on my Australian property if I live overseas?

Yes. Australian real estate is taxable Australian property, so it stays in Australia's CGT net regardless of where you live. As a foreign resident you also generally lose the 50% discount for your non-resident years.

Can I still claim the main residence exemption as an expat?

Usually not. If you're a foreign resident on the day you sign the sale contract, you generally lose the exemption entirely — not even apportioned for resident years — unless a narrow life-event exception applies within six years of becoming a non-resident.

What is foreign resident capital gains withholding?

Foreign resident capital gains withholding (FRCGW) is an amount collected at settlement when Australian property is sold, to prepay any CGT. From 1 January 2025 it's 15% of the sale price with no value threshold, so it applies to every property sale unless the seller gives the buyer a clearance certificate confirming they're an Australian resident.

What is a foreign resident capital gains withholding clearance certificate?

It's a free certificate from the ATO confirming you're an Australian resident for tax purposes, so no FRCGW needs to be withheld from your sale. You apply online before settlement; certificates are usually issued quickly but can take up to 28 days and are valid for 12 months.

What happens to my assets when I leave Australia?

If you were a permanent resident or citizen, you're treated as having disposed of your assets that aren't taxable Australian property at market value on the day you cease residency (CGT event I1), and the 50% discount still applies to the resident part of any gain. You can choose to pay CGT then, or elect to keep those assets in the Australian net and defer until you actually sell. Real estate is excluded and stays taxable here. Temporary residents aren't subject to CGT event I1 on departure.

I'm an Australian resident selling my home — do I really need a clearance certificate?

Yes. From 1 January 2025 foreign resident capital gains withholding applies to all property sales with no price threshold. Without a clearance certificate confirming your residency, the buyer must withhold 15% of the price and remit it to the ATO, and you recover it through your return.

Does the timing of my sale matter?

Enormously. The main residence exemption and the discount both depend on your residency at the contract date, so selling while still a resident can preserve concessions that disappear once you're a foreign resident.

Reminder: general information, not personal advice. Tax residency is complex and fact-dependent, and the consequences of getting the timing wrong are large. A registered tax agent can apply these rules to your circumstances before you leave or sell.

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