Tax residency is not citizenship
The ATO decides whether you are an Australian resident for tax using four tests: the resides test, the domicile test, the 183-day test and the Commonwealth superannuation test. Your citizenship does not decide it, and neither does your FIRB status. An Australian citizen who lives and works overseas may be a foreign resident for tax. The ATO has a tool that helps you work out your status.
Rent
A foreign resident pays tax on Australian rent at foreign-resident rates. There is no tax-free threshold, and foreign residents do not pay the Medicare levy.
| Taxable income (2025–26) | Tax |
|---|---|
| $0 to $135,000 | 30c for each $1 |
| $135,001 to $190,000 | $40,500 plus 37c for each $1 over $135,000 |
| Over $190,000 | $60,850 plus 45c for each $1 over $190,000 |
These are the 2025–26 foreign-resident rates on the ATO site when we checked. Check the ATO for the current year.
When you sell
- No main residence exemption. Foreign residents cannot claim it on property sold after 30 June 2020, unless they meet the life events test (a continuous foreign-resident period of six years or less, plus a terminal medical condition, a death, or a relationship breakdown). No partial exemption applies either.
- No full 50% CGT discount. If you were a foreign or temporary resident throughout your ownership of an asset bought after 8 May 2012, you are not entitled to any CGT discount. If you were an Australian resident for part of the time, an apportioned discount may apply.
- 15% withholding. From 1 January 2025 the buyer withholds 15% of the price when a foreign resident sells Australian property, and pays it to the ATO at or before settlement. It is credited against the tax you owe. Australian residents with a clearance certificate are not subject to it.
Tax treaties
Australia has double tax agreements with many countries, which can give relief where both countries tax the same income. Treasury’s list does not include Hong Kong or the United Arab Emirates.
| Country | Double tax agreement |
|---|---|
| Singapore | Yes. A double tax agreement has been in force since 1969. |
| Hong Kong | No. Treasury’s list of income tax treaties does not include Hong Kong, so there is no treaty relief on Australian rent or gains. |
| China | Yes. A double tax agreement has been in force since 1990. |
| India | Yes. A double tax agreement has been in force since 1991. |
| United Kingdom | Yes. A double tax agreement has been in force since 2003. |
| United States | Yes. A double tax agreement has been in force since 1983, and Australia has a FATCA agreement with the US. |
| United Arab Emirates | No. Treasury’s list of income tax treaties does not include the UAE. |
| Malaysia | Yes. A double tax agreement has been in force since 1981. |
| New Zealand | Yes. The current double tax agreement has been in force since 2010. |
Source: Treasury list of income tax treaties. Your home country’s own rules decide how it taxes the income.
What to do before you buy
Find out your tax residency
Use the ATO’s residency tests, or ask a tax agent.
Work out the tax on rent and on a future sale
The numbers above change a deal that looks fine on price alone.
Ask your home country’s adviser how it taxes Australian rent and gains
Treaty relief and foreign tax credits differ by country.
Frequently asked questions
Do foreign residents pay tax on Australian rent?
Yes, at foreign-resident rates: 30% on the first $135,000 of taxable income for 2025–26, with no tax-free threshold.
Can I get the main residence exemption if I live overseas?
Generally not, for property sold after 30 June 2020, unless you meet the life events test.
What is the 15% withholding?
When a foreign resident sells Australian property, the buyer withholds 15% of the price and pays it to the ATO. It is credited against the tax you owe on the gain.
Sources
- ATO: Australian resident for tax purposes
- ATO: Tax rates for foreign residents
- ATO: Main residence exemption for foreign residents
- ATO: CGT discount for foreign residents
- ATO: Your residency status and CGT
- ATO: Foreign resident capital gains withholding overview
- Treasury: Income tax treaties
From the ATO and Treasury. Checked 7 October 2026. Not tax advice.
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.