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.

 

[TIG2]

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

It may also keep many out of over crowded and expensive nursing homes if able to move closer to family or facilities

 

[TIG2]

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

All about money, now one has to pay another $20 for some form from the ATO you must have a clearance certificate from the ATO when selling property to avoid the requirement of purchasers to withhold an amount from the sale until the certificate is provided and that can take at least 28 days.

 

[Aussiecris]

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.

Just remember Australians sold the property to them, the seller may have been in financial difficulty and needed to accept the offer.

 

[TIG2]

Include Aussies as well who buy property and leave it empty for years. There is one 3 houses from us lovely home just sitting empty waiting for price to go up in years to come who people are homeless

 

[TIG2]

Just remember Australians sold the property to them, the seller may have been in financial difficulty and needed to accept the offer.

With the market as tight as it is pretty sure there would be Australians willing to make an offer

 

[Reet]

What happens to people who have no Tax Number such as a widow who had the property registered into her name when her husband died and had never worked . She would have no record with the ATO and would not be able to claim any money back from the sale of her house.

 

[Johnnie boy]

All about money, now one has to pay another $20 for some form from the ATO you must have a clearance certificate from the ATO when selling property to avoid the requirement of purchasers to withhold an amount from the sale until the certificate is provided and that can take at least 28 days.

I didn’t know about that one. Another reason for me to remain put

 

[Luckyus]

Another kick in the Bollocks from our friendly government? GIVE ALBO - THE ELBOW

 

[TIG2]

I didn’t know about that one. Another reason for me to remain put

Yep we sold 4 months ago and got told by our agent to get one ASAP

 

[Agave]

Id like more details on this - does it include ALL property sales ? Does it include single retired pensioners who don't pay tax?
More content please..

 

[Agave]

Another kick in the Bollocks from our friendly government? GIVE ALBO - THE ELBOW

Good catch phrase!

 

[TIG2]

Id like more details on this - does it include ALL property sales ? Does it include single retired pensioners who don't pay tax?
More content please..

Australian residents and clearance certificates | Australian Taxation Office

Australians selling property need a clearance certificate to avoid having an amount withheld from the sale price.

www.ato.gov.au

 

[lynstacker]

First of all, foreigners - non Australian citizens should not be permitted to buy/own property here but our leaders seem to think it is ok. I sold my home 2 years ago & the conveyancer organised the certificate but of course it is another cost. Another cash grab by the powers that be

 

[Agave]

First of all, foreigners - non Australian citizens should not be permitted to buy/own property here but our leaders seem to think it is ok. I sold my home 2 years ago & the conveyancer organised the certificate but of course it is another cost. Another cash grab by the powers that be

Thanks lynstacker but does that include retired pensioners as well?

 

[Dirtdevil]

My wife and I looked into down sizing when our last child left home 12 years ago.
we sat down with our financial advisor and agent and worked out it would cost just over $40.000 to move into another home with all the fee’s and charges, it really was not worth it so we stayed where we are.
As we are both nearly 70 it would make moving a lot easier if government charges are dropped, it would free up houses for families that need a larger house.

 

[Luckyus]

I can't go to China and buy property, I can't buy property in the Philippines etc. So why does the governments of the day allow it to happen here. Unless your intention is to assimilate and domicile here, the government should put a complete stoppage on foreigner ownership of property. Also the government should pass and enact laws to disallow arable lands being used for wind turbines and solar panels.

 

[Agave]

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.

The wording confuses me.
- is it JUST Foreign investors?
- is it for Australian residents?
- us it for Australian residents who are retired and don't pay tax?

 

[TIG2]

Thanks lynstacker but does that include retired pensioners as well?

yes everyone !

 

[TIG2]

With the market as tight as it is pretty sure there would be Australians willing to make an offer

Yes but owners are not interested in selling just waiting for it to gain value, this has to stop wether you are an Australian or not.

 

[TIG2]

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?

Everyone