Australian expats living abroad had been told in January this year that they would be slumped with big capital gains tax (CGT) unless they sold their property by 30 June 2020 in order to claim a CGT main residence exemption.
The exemption for Australian expatriates has been available since 20 September, 1985, and was applicable so long as the home was rented out for no more than six years at a time.
The change in the law during the coronavirus crisis, however, has resulted in thousands of Australian expats unable to sell their family home before the deadline so as to avoid the large CGT.
The new rules were flagged in the May 2017 federal budget but were introduced by the Federal Government in December as a housing-affordability measure designed to save $581 million.
Tax experts have tried for weeks to convince Australia’s Government to extend the 30 June deadline, however the government has dismissed this request.
READ MORE: Australian expatriates slumped with hefty taxes after capital gains tax exemption is scrapped
Australian Treasurer Michael Sukkar told ABC News that changes were first announced in the 2017 budget, giving expats ample time to sell their homes.
“A very reasonable grandfathering arrangement was put in place for foreign tax residents, and by 30 June, 2020 they will have had over 37 months to dispose of their property and still been able to access the exemption,” Mr Sukkar said of the law that was passed in December 2019 before the ban on live real estate auctions and open house inspections.
Another problem includes the 14-day self-isolation requirement for expats returning to Australia in order to meet with real estate agents and prepare their homes for the sale process.
If you are someone who will be affected by this new law please email mary@neoskosmos.com.au