From 1 January 2025, all Australian residents (for tax purposes) selling or disposing of Australian real property (land and buildings) must have a clearance certificate and give it to the purchaser at, or before settlement.  If a clearance certificate is not provided, 15% of the sales price (or market value if not at arm’s length) will need to be withheld (up from 12.5%). Previously, clearance certificates were only required where the value of the property is $750,000 or more.

For foreign resident vendors, the withholding is made available as a credit against any tax liability. The vendor only receives any refund due after their next income tax return is processed at tax time.

Just because you have a clearance certificate, it doesn’t mean you’re off the hook for other CGT (Capital Gains Tax) obligations. If you’ve sold a property, you still need to report any capital gains or losses in your tax return. Don’t forget to include any exemptions or rollover codes that might apply to your situation. For example, the main residence exemption only covers up to two hectares of land that’s next to your home. We often see clients selling properties that are bigger than that, so we need to work out the capital gain for any extra land beyond the two hectares, using its original cost as a basis.  We also often have clients who are selling their investment properties. If you make a capital gain on the sale, you’ll need to pay capital gains tax on that gain.

If foreign resident capital gains withholding ("FRCGW") was withheld from your property sale, please let us know and provide the ‘FRCGW payment confirmation’ you received from the buyer.  And if you lived in the property at any point while you owned it, be sure to give us all the details. This helps us work out if the main residence exemption applies to you, and how much of it you can claim.

If you have any questions or need help, just reach out!

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Please also note that many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances. Should you have any further questions, please get in touch with us for assistance with your SMSF, business, bookkeeping and tax requirements. All rights reserved. Brought to you by RGA Business and Tax Accountants. Liability Limited by a scheme approved under Professional Standards Legislation.