The dates that matter
Several dates are quoted for these rules, and they belong to different rules:
| Date | What it relates to |
|---|---|
| 8 May 2012 | The CGT discount. Foreign and temporary residents are not entitled to the full 50% discount on assets acquired after this date |
| 9 May 2017, 7:30 pm Canberra time | Transitional cut-off for the main residence change |
| 30 June 2020 | Foreign residents cannot claim the exemption for property sold after this date, unless the life events test is met |
The transitional rule applied to people who acquired a property before 7:30 pm on 9 May 2017 and disposed of it by 30 June 2020. They did not need to meet the life events test. For a sale today, the working rule is the 30 June 2020 one.
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The life events test
A foreign resident can still claim the exemption if both of these apply:
- You were a foreign resident for tax for a continuous period of 6 years or less.
- During that period one of these happened: a terminal medical condition affecting you, your spouse or your child under 18; the death of your spouse or child under 18; or a CGT event resulting from a formal agreement after a marriage or relationship breakdown.
If you do not meet both, there is no partial or apportioned exemption, even if you were an Australian resident for most of the time you owned the home.
How the six-year absence rule fits in
The ATO's absence rules let you keep treating a former home as your main residence after you move out. You can do that for up to 6 years if you use the home to produce income, such as rent, or indefinitely if you do not. The home must have been your main residence first, and you cannot treat any other property as your main residence during that period. The 6-year limit applies separately to each absence that immediately follows a period you lived in the home.
Those rules work only if the exemption is available at all. Foreign residency at the time of the sale takes you outside them. The ATO also says that if you were not an Australian resident while you were living in the property, you are unlikely to meet the requirements for the exemption.
Leaving Australia does not itself trigger capital gains tax on the home. The ATO's deemed disposal on ceasing residency excludes taxable Australian property such as Australian real estate.
Worked example
Assume a home bought for $600,000, lived in for six years, then rented out when the owner moved overseas. It is sold under a contract signed two years later for $900,000. To keep the arithmetic simple, ignore purchase and selling costs and assume no other property is treated as a main residence.
- Capital gain: $900,000 - $600,000 = $300,000.
- If the owner is an Australian resident when the contract is signed: the absence is two years, inside the 6-year limit for a rented home, so the gain can be fully exempt. Tax on the gain: $0.
- If the owner is a foreign resident when the contract is signed and the life events test is not met: the exemption is not available. If the $300,000 were the only taxable income, the 2026-27 foreign resident scale gives $60,850 + 45% x ($300,000 - $190,000) = $60,850 + $49,500 = $110,350. That is before any apportioned CGT discount, which the ATO allows for the period you were an Australian resident if you bought the property after 8 May 2012.
Separately, the buyer must withhold 15% of the price at settlement when the seller is a foreign resident: 15% x $900,000 = $135,000. That amount is credited against the tax assessed. See selling from overseas and the clearance certificate.
Why the timing question comes up
Because the test looks at your residency on the disposal date, the dates in your life matter more than the number of years you lived in the home. Residency is decided by four tests, and a person who has moved abroad but not set up a permanent home overseas may still be a resident. A tax agent can say where a particular person stands before a contract is signed. The wider consequences for people with Australian mortgages are in moving overseas with an Australian mortgage and the pillar overview of tax on Australian property.
Keep reading
- Selling an Australian property from overseas: the clearance certificate and 15% withholding
- Australian tax residency tests explained: are you a resident or a foreign resident?
- Moving overseas with an Australian mortgage: what to tell your lender
- Returning to Australia: getting a home loan as a returning expat
- Tax for Australian expats: what the ATO expects while you live overseas
- Do Australian expats pay the foreign buyer stamp duty and land tax surcharges?
Frequently asked questions
Do I lose the exemption the day I move overseas?
No. The ATO tests your residency when you dispose of the property, not when you leave. What matters is whether you are a foreign resident at that time. If you remain an Australian resident while abroad, the usual rules, including the 6-year absence rule, can still apply.
Does the 6-year rule help if I am a foreign resident when I sell?
Generally no. The ATO says a foreign resident at the time of a CGT event on Australian residential property generally cannot claim the exemption, whether or not the 6-year rule would have applied. The life events test is the exception.
Is there a partial exemption for the years I lived there?
Not for a foreign resident. The ATO says there is no partial or apportioned main residence exemption, even if you were a resident for part of the ownership period. A different, separate concession is the apportioned CGT discount for the years you were a resident.
Which date counts when I sign a contract and settle later?
The ATO says that where there is a contract, disposal occurs when the contract is entered into. Otherwise it is settlement. That matters because residency is tested at the time of disposal, so on the ATO's wording the contract date, not the settlement date, is the day to test for a contract sale. A tax agent can confirm the date for a particular sale.
Sources
- Main residence exemption for foreign residents, Australian Taxation Office
- Treating a former home as your main residence, Australian Taxation Office
- Eligibility for the main residence exemption, Australian Taxation Office
- CGT discount for foreign residents, Australian Taxation Office
- How changing residency affects CGT, Australian Taxation Office
- Tax rates: foreign residents, Australian Taxation Office
- Foreign resident capital gains withholding overview, Australian Taxation Office
Checked 7 October 2026.
Expat Finance is an independent guide. It is not a lender, mortgage broker or credit provider, it does not hold an Australian credit licence, and it does not give credit, legal, tax or migration advice. It is not affiliated with any bank, the ATO or the Foreign Investment Review Board. General information only, not legal, tax, migration or financial advice.