I've moved overseas — if I sell my old Australian home now, is the gain still exempt from capital gains tax?

The house did its job. You bought it, lived in it for years, and in every sense the tax law cares about, it was your home. Then work, or family, took you back overseas, and the place has sat there since — maybe rented out, maybe just kept. Now there is a reason to sell. The assumption most people carry into that decision is the one that used to be true for everyone: it was my home, so the gain is exempt. For someone who is no longer an Australian resident for tax purposes, that assumption is the expensive part.

The rule changed in 2020, and it is unforgiving

Since 1 July 2020, a person who sells their main residence while they are a foreign resident for tax purposes cannot claim the main residence CGT exemption on that sale. The ATO's position leaves little room. This is not a reduced exemption, and it is not a pro-rata one for the years the home was actually lived in. If you are a foreign resident at the moment that counts, the exemption is simply not available, and the whole gain is potentially assessable — including the growth from the years you were living in the house as your home.

There used to be transitional relief for properties owned before 7:30pm (AEST) on 9 May 2017, but that window closed on 30 June 2020. For a sale happening in 2026, it is gone.

The date that decides everything is the contract date

The single most important fact in this whole area is timing, and it is not the timing people expect. What matters is your residency status for tax purposes on the date of the CGT event — which for property is the date you sign the contract of sale, not the settlement date weeks later.

Sign while you are still an Australian resident for tax purposes and the ordinary main residence rules are back in play. Sign one day after you have become a foreign resident and the exemption can be lost entirely. Tax residency is its own test — it is not the same thing as your visa, your citizenship, or simply how many days you spent here — and getting a clear read on your status before signing anything is the part that pays for itself.

One narrow door: the life events test

There is a single exception, and it is deliberately narrow. A foreign resident can still reach the exemption only if two things hold at once: they have been a foreign resident for a continuous period of six years or less at the time of the sale, and one of a short list of life events happened during that period. Those events are a terminal medical condition affecting you, your spouse, or your child under 18; the death of your spouse or your child under 18; or a marriage or relationship breakdown, evidenced by a court order under the Family Law Act 1975 or one of the specified agreements.

Absent one of those, six years or six months of foreign residency makes no difference. The exemption is off the table.

Two things people get wrong

The first is that the years spent living in the home must 'count for something' regardless. Under the old rules a former home could keep its exemption for a period after you moved out, and part-year apportionment softened the edges. That thinking does not carry over. Sell as a foreign resident outside the life events test and there is no partial credit for the homeowner years — the calculation runs from the original cost base, across the entire period of ownership.

The second is confusing the tax on the gain with the cash held back at settlement. From 1 January 2025, foreign resident capital gains withholding requires the buyer to withhold 15% of the sale price and pay it to the ATO on every property sale, with the old $750,000 threshold removed. Australian residents avoid this by giving the buyer an ATO clearance certificate; a foreign resident generally cannot get one, so 15% of the price — not of the profit — is withheld up front. That amount is not the final tax. It is a prepayment, credited against the actual CGT worked out in the return, with any difference refunded or payable then. Worth adding: the 50% CGT discount is itself reduced for periods of foreign residency after 8 May 2012, so the discount many owners assume applies may be smaller than expected.

None of this is an argument to rush a sale, and it is certainly not a suggestion to change where you live for tax reasons. The point is narrower. For anyone who owns a former Australian home and now spends their life overseas, residency status is not a footnote to the sale — it is the thing that determines the tax on it, and it is fixed at the moment the contract is signed. The government has kept tightening the foreign resident CGT net: the withholding regime now reaches every sale, and further measures have been moving through Parliament, so the direction of travel is one way.

The sensible sequence is to establish your tax residency position first, model the gain second, and only then decide on timing — well before a contract is in front of you. This is general information current as at July 2026, not advice for your circumstances, which turn on when you acquired the property, how long you lived in it, your residency history and the exact timing of any sale. Our individual tax return service is where that assessment gets done properly; if the property has also been earning rent, our service for property investors covers the annual side.