Professionals Burleigh 
It was only by chance that London-based expats Greg Pritchard and My Truong happened upon a random accountancy website alerting them to looming changes to the Australian capital gains tax regime.
It was a lucky find given that 35 years after the CGT exemption was applied to the Australian family home, it is set to be scrapped for non-resident Australians from June 30 if they sell while still overseas.
Currently, all Australian homeowners can claim an exemption on the tax payable on any capital gain from the sale of their primary residence, and until June 30 that has included Australians who are living overseas.
That gives Mr Pritchard and Ms Truong four months to sell the luxury three-bedroom apartment they bought in 2011 in the Forum building in St Leonards, on Sydney’s lower north shore, or potentially cop a tax bill of almost 20 per cent of its sale price when they sell after that date.
“We’re Australian. We bought in good faith, and we are paying tax on the rental in Australia,” said Mr Pritchard, who, like Ms Truong, moved to London five years ago to work in the financial services industry. “We’re contributing to the economy from afar, but these changes completely disincentivise expat Australians from having a financial exposure to Australia.
“We’re being lumped in with speculative foreign investors. Why would we ever ‘financially’ return?”
There is no data to show how many expats home owners could be impacted by the bill, but figures show there were 182,000 non-resident Australians registered with the Australian Tax Office in the 2016-17 financial year, the most recent period for which data was available.
The couple’s outrage is shared by Professor Bob Deutsch of the University of New South Wales and senior tax counsel at The Tax Institute.
“In effect, it will wipe out the entire benefit that an Australian home owner has in their family home. So, if they bought it in 1990 and moved overseas last year if they sell after June 30 they lose the CGT exemption for the whole 30 years, not just the brief period they were away,” he said.
Professor Deutsch said the fairer option was to lose the CGT benefit for the time the home owner lives overseas.
“This is forcing people to go to the market now, and changing tax implications shouldn’t be driving this sort of behaviour,” he said.
The Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Bill was first introduced in the 2017-18 federal budget, but stalled in the lead up to last year’s election, only to re-introduced after the Coalition was re-elected. It passed the Senate in December.
The June 30 deadline has resulted in a slew of sales and upcoming listings, said McGrath’s leading north shore agent Peter Chauncy. “All these owners were not considering selling their properties but have now done so to avoid the extra tax liability.”
Mr Chauncy will sell Mr Pritchard and Ms Truong’s apartment with a $1.55 million price guide in the coming weeks .
An Australian Tax Office spokesman said home owners were able to claim the exemption if they sold the property before June 30 or returned to live in it before it was sold.
There is no statistical data to show how many expats home owners could be impacted by the bill, but figures show there were 182,000 non-resident Australians registered with the Australian Tax Office in the 2016-17 financial year.
Domain senior research analyst Nicola Powell said if there were enough new listings in key areas by expats hoping to sell before the new tax regime took effect then a spike in supply could overwhelm demand as well affect the rental market as those properties are sold.
“There is an element of the new rules that doesn’t look adequately at how we work remotely and how transient our working lives are nowadays,” Dr Powell said.
“It was just lucky that we are on top of our financial affairs,” said Mr Pritchard. “There was certainly no communication from any government entity to advise us [of the tax change].”
Source:
LUCY MACKENTWITTER
PRESTIGE PROPERTY REPORTER FEB 15, 2020
https://www.domain.com.au/news/sydney-homes-of-expats-hit-the-market-to-beat-looming-cgt-deadline-928963/
