Australians working overseas are set to lose a significant tax benefit on investment properties due to a change in capital gains tax (CGT) rules. The reform, which takes effect from July 1, 2027, will remove a lucrative CGT discount for expats, regardless of their prior residency or tax contributions in Australia.
Tax specialists have described the residency requirement as particularly stringent. Previously, non-resident Australians only forfeited the CGT discount for the period they lived abroad. For instance, an individual who owned an investment property for 30 years but spent only three years overseas could still claim the discount for the remaining 27 years upon selling the property.
Under the new legislation, however, this same investor could be disqualified from the discount entirely, even if they had resided and paid taxes in Australia for decades before accepting an overseas assignment. This change was included in budget legislation that recently passed through parliament.
Ben Turner, an expat tax specialist at Atlas Wealth Management, noted that the new CGT indexation regime requires individuals to have been neither a foreign nor a temporary resident at any point during a specified testing period. This effectively means any period spent living outside Australia, even if brief, could nullify access to the discount for the entire duration of property ownership.
KPMG partner Craig Robinson, who also advises expatriates on tax matters, confirmed this interpretation, stating that the budget legislation explicitly states non-tax residents will be excluded from the concession. The change is expected to impact many Australians working abroad who own investment properties back home.