As Aussies welcomed the new year, the government also released a slew of changes that could affect daily lives.

In the case of property sellers, they now face a change that could leave them out of pocket when unprepared.

The Australian Taxation Office (ATO) has revised the foreign resident capital gains withholding (FRCGW) rules since 1 January.

The new rules should affect foreign investors and Australian residents selling property.

According to the revision, Australian residents who plan to sell property should have a clearance certificate from the ATO to confirm their tax residency status.

Without a clearance certificate, buyers would be obligated to withhold 15 per cent of the property sale price and remit it directly to the ATO.

Australian property sellers should comply to these new regulations to avoid massive withheld amount. Image Credit: Pexels/Thirdman

This could mean a substantial loss for sellers.

With an average Australian home value of $814,837, a 15 per cent withholding would amount to approximately $122,225.

Property sellers will have to wait until their next tax return to claim the withheld amount.

This change marked a significant shift from the previous rules.

Previous rules stated that sellers with properties valued at $750,000 or more should provide a clearance certificate.

Before the overhaul, the withholding rate was at 12.5 per cent.

With the threshold removed and the withholding rate increased to 15 per cent, more sellers will be impacted.

Obtaining a clearance certificate is a straightforward, cost-free process. Yet, it requires attention and foresight.

The ATO advised sellers to apply for the certificate early in the selling process, as issuance could take up to 28 days.

Once obtained, the certificate should be valid for 12 months.

Property sellers can apply for a clearance certificate through the ATO website.

Obtaining a clearance certificate should be managed by your conveyancer or solicitor, but there's no harm in being proactive.

Tax Invest Accounting Director Belinda Raso urged those who have been considering selling their property this year to get organised and apply for the certificate now.

It's a precautionary step that could save property sellers down the line.

Key Takeaways

• Australian property sellers should obtain a clearance certificate from the ATO for tax purposes.
• The foreign resident capital gains withholding (FRCGW) rate has increased from 12.5 per cent to 15 per cent, and the $750,000 property value threshold has been removed.
• For those without a clearance certificate, a withholding amount of 15 per cent of the sale price should be paid directly to the ATO instead.
• Clearance certificates are free and valid for 12 months, and quicker to obtain if applied for early.

Are you planning to sell any property in the near future? How do you feel about these tax changes? Share your thoughts about these changes in the comments section below.

 

[Suzanne rose]

I have never heard of this but I haven't sold a house since 1988. I would hope that the solicitor would know and do this for you.

We were going to sell and move down the coast but decided to renovate and stay for at least another 5 years. Hubby feels we need to keep our big house in case any of our kids need to come home.
We were down to 4 kids being home , now it's 5 with our 39 year old son coming back( he is our boomerang)

 

[Dirtdevil]

Is this for People that have investment properties and people who are not in Australia but have property here.
or this is for everyone that sell there family home?

 

[TIG2]

I am fine with this and think it is a good thing. My only comment is Stamp Duty should be looked at for Seniors and consider no stamp duty for over 70s. Many elderly need to move closer to facilities , closer to family or many other reasons. Helping them do so may free up more family size homes.

 

[MickyMouse24]

I agree with being SD free, and it wouldnt affect the value of housing. Unlike the first home developers grants.

 

[Johnnie boy]

Thanks for informing us. I do not consider selling but there are often hidden costs dictated to like these. One would think once you had a contract it was valid instead of slapping charges on that are not generally understood

 

[Johnnie boy]

Thanks for informing us. I do not consider selling but there are often hidden costs dictated to like these. One would think once you had a contract it was valid instead of slapping charges on that are not generally understood

I think it’s an excellent move to tax foreigners buying into our real estate. There are so many expensive properties around me which remain empty because the owners’ country of origin isn’t ours

 

[Veggiepatch]

Slap foreign investors with excessive stamp duty, GST, transfer duty, land tax and capital gains tax.

Increase council rates to a minimum of $10000 a quarter and increase exponentially according to the property value. You foreigners are the cause of inflated house prices in this country so it is time to pay.

All of this is under the jurisdiction of the Foreign Investment Review Board (FIRB) and if these charges are not paid by the due date, the property is immediately seized with no avenue for recourse.

Might make these opportunist aliens think twice about purchasing Australian property, both residential and commercial.

 

[Winks]

Is this for People that have investment properties and people who are not in Australia but have property here.
or this is for everyone that sell there family home?

It’s seems to be for Aussies also.

 

[Macarj]

I have never heard of this but I haven't sold a house since 1988. I would hope that the solicitor would know and do this for you.

We were going to sell and move down the coast but decided to renovate and stay for at least another 5 years. Hubby feels we need to keep our big house in case any of our kids need to come home.
We were down to 4 kids being home , now it's 5 with our 39 year old son coming back( he is our boomerang)

we sold our family home in 2020 and didn't have to pay that

 

[Reet]

we sold our family home in 2020 and didn't have to pay that

I thought this was for property that is sold to foreigners not for property sold to existing Australians.

 

[Mika in the van]

I have never heard of this but I haven't sold a house since 1988. I would hope that the solicitor would know and do this for you.

We were going to sell and move down the coast but decided to renovate and stay for at least another 5 years. Hubby feels we need to keep our big house in case any of our kids need to come home.
We were down to 4 kids being home , now it's 5 with our 39 year old son coming back( he is our boomerang)

It’s only capital gains tax. Not for your private residence if you have lived there for a certain length of time. 2 years I think.

 

[Mika in the van]

I thought this was for property that is sold to foreigners not for property sold to existing Australians.

It’s capital gains tax. Not for normal selling of your private residence.

 

[Mika in the van]

Is this for People that have investment properties and people who are not in Australia but have property here.
or this is for everyone that sell there family home?

You don’t pay capital gains tax when you sell your family home.

 

[Mika in the van]

This headline needs clarification. Appears lots of people haven’t seen the word’s CAPITAL GAINS TAX. . You don’t pay that when selling your private residence if you have lived there for a minimum of 1 Year.??

 

[Cheezil]

I read this as anyone in Australia or from overseas selling any property

Is this for People that have investment properties and people who are not in Australia but have property here.
or this is for everyone that sell there family home?

I read this as anyone selling any property in Australia
"According to the revision, Australian residents who plan to sell property should have a clearance certificate from the ATO to confirm their tax residency status".

 

[Cheezil]

We will be taxed to have a poo soon! We are close to working our a*ses of for everyone except ourselves now days anyway!

Once upon a good ol time we could work for wages & pay some income tax without all losing a chunk of our pay to hidden costs - ie bs taxes, levies, excises, surcharges, fees, charges, admin costs, service fees, etc etc all to no doubt cover the loads of blunders our governments keep on making all the while ignoring spending on our rural roads, our hospitals,our schools, our police force, our firies, ses, etc!

 

[Veggiepatch]

We will be taxed to have a poo soon!

That reminds me to stock up Gastro-Stop even though I am constipated most of the time.

Which goes to prove that most people are correct in saying I'm full of shit....

 

[Miss Chris]

That reminds me to stock up Gastro-Stop even though I am constipated most of the time.

Which goes to prove that most people are correct in saying I'm full of shit....

Know Thyself..

“A philosophical maxim inscribed upon the Temple of Apollo in the Ancient Greek precinct of Delphi “

 

[Noraya]

Slap foreign investors with excessive stamp duty, GST, transfer duty, land tax and capital gains tax.

Increase council rates to a minimum of $10000 a quarter and increase exponentially according to the property value. You foreigners are the cause of inflated house prices in this country so it is time to pay.

All of this is under the jurisdiction of the Foreign Investment Review Board (FIRB) and if these charges are not paid by the due date, the property is immediately seized with no avenue for recourse.

Might make these opportunist aliens think twice about purchasing Australian property, both residential and commercial.

I assume with foreign investors you mean those who do not live here? But what about residents who are not or not yet Australians? I ve lived here for 30 years, but as I wasnt able to get dual citizenship the first 28 years I was a "foreigner". Not that I was rich! I was working in community care, meaning very low income! And I m not the only one!