Generally, if you sell a house that was your main residence, you will receive an exemption for any capital gains tax or “CGT” as its commonly known. In other words, any capital gain you make on the sale of your home – the difference between what you originally paid and what you sold your home for, will not be liable to taxation. This is known as the “main residence exemption”.

This exemption, as the name implies, is only able to be used on the home you live in and there is a complex series of factors that go into determining whether a house is considered your main residence. The simplest of course, is whether you actually live in it.

Under certain circumstances, you may be able to treat a house as your main residence even after you have moved out.

Other factors that are considered when making your tax assessment are whether it contains your personal belongings, is it your registered address on voter rolls and if your mailing address matches that of what you are stating is your “main residence”.

However, we’ve recently seen proposed changes to the tax policy. The 2017 Federal Budget outlined an intention to make foreign residents ineligible for the main residence exemption. While not yet law, the legislation is before the Senate and expected to pass.

Once it does, a foreign resident who sells a home in Australia that was purchased after May 8, 2017 will no longer be entitled to claim the main residence exemption. From July 1, 2019 onwards, this will apply to the sale of any house by a foreign resident, irrespective of when it was purchased.

This change will also affect you if you are not an Australian resident at the time of the sale, which is defined as being the day you sign the contract of sale.

So, if I assume you bought your Albury home prior to May 9, 2017. If you become a foreign resident and subsequently sell, you may still qualify for the main residence exemption, provided the sale occurs before  June 30, 2019. If it sells after that date, you will likely be taxed on any profit.

If you would like more information on this topic or have another tax question e-mail me at tax.albury@crowehorwath.com.au.

Any information in this article has been prepared without taking into account your personal circumstances. You should seek professional advice before acting on any material. While reasonable care is taken in the preparation of this information to the extent allowed by legislation, Crowe Horwath (Aust) Pty Ltd ABN 84 006 466 351, accepts no liability whatsoever for reliance on it.