In short
- Your Australian home and other land and buildings stay in the Australian tax system after you leave; they are not taxed on the day you go.
- Rent it out while you are away and the rent is taxed in Australia from the first dollar.
- Sell while a foreign resident and you lose the home exemption; come back and sell within six years as a resident, and it can still be free of capital gains tax.
You might be leaving for a job, for family, or for a quieter life somewhere warmer. There is a date on the ticket. For tax, that date can matter as much as any sale you make.
Some of what you own is treated as sold on the day you go. Your home, and any other land and buildings in Australia, stay in the Australian tax system until you sell.
It turns on residency, not your passport
Capital gains tax follows your tax residency, not your citizenship or your visa. An Australian citizen can stop being a resident for tax. Someone who is not a citizen can be one.
The day your residency ends is the day the rules below start to work.
The day you leave
When you stop being a resident, the tax law treats most of what you own, such as shares, as sold at its value on the day you leave. You can choose instead to put off that tax until you actually sell.
The choice covers everything or nothing. It is made by the day you lodge your return for the year you left.
Land and buildings in Australia are left out of this rule. They are taxed only when you sell them.
If you rent your home out while you are away
This is the case most people ask about. You move overseas, keep the home, and rent it out.
The rent is Australian income. As a foreign resident you pay 30% from the first dollar, up to $135,000. There is no tax-free threshold, and no Medicare levy.
You can still claim the usual rental costs, such as interest, rates and repairs, for the time the home is rented or genuinely available for rent.
Selling while you are a foreign resident
Three things change if you sign the contract while you are still a foreign resident.
First, the home exemption is lost. It does not matter how long you lived there. The six-year rule, which can keep a former home free of tax, does not help a foreign resident seller.
There is one narrow way back, called the life events test. You must have been a foreign resident for six years or less in a row, and one of these must have happened in that time: you, your spouse or your child under 18 had a terminal medical condition; your spouse or your child under 18 died; or the sale happens because of a court order or a binding financial agreement after your marriage or relationship with your spouse breaks down.
Second, the 50% discount shrinks. It is cut to match the share of time you were a resident while you owned the home.
Third, the buyer holds back 15% of the price at settlement and sends it to the tax office. You claim it back as a credit when your Australian return is assessed. An Australian resident seller avoids the hold-back with a clearance certificate: a letter from the tax office, given to the buyer before settlement, confirming the seller is a resident.
A worked example: Priya
Priya is invented, and so are her numbers. They show how the rules fit together.
She buys a home in Brisbane on 1 July 2016 for $600,000. Stamp duty and legal costs come to $25,000. She lives there for four years.
On 1 July 2020 she moves to Singapore for work and becomes a foreign resident. She rents the home out. After costs, the rent leaves her $8,000 a year.
Five years later, on 30 June 2025, she signs a contract to sell for $900,000. Selling costs are $20,000. She is still a foreign resident.
Her rent is taxed at 30% from the first dollar. That is $2,400 a year from 2024-25.
Her gain is $900,000, less what the home cost her with buying and selling costs: $255,000.
She was a resident for 1,461 of the 3,287 days she owned the home. Her discount is cut from 50% to about 22.2%, so $198,329 of the gain is taxed.
Add the year’s rent and her taxable income is $206,329. At foreign resident rates her total tax for 2024-25 is $68,198, which includes the tax on her $8,000 of rent. On the net gain of $198,329 alone, it would be $64,598.
At settlement the buyer holds back $135,000. Once her return is assessed, about $66,800 comes back to her, assuming she owes no other Australian tax.
Her three choices, side by side
Here is what each path would have meant for Priya. The table is read out in the sentences after it.
| A. Sell before you leave | B. Rent it out, sell later as a foreign resident | C. Come back, sell as a resident within 6 years | |
|---|---|---|---|
| Tax on rent while away | A. Sell before leavingNone, no rent | B. Rent out, sell from overseas30% from the first dollar | C. Come back, sell within 6 years30% while away; resident rates once back |
| Main residence exemption | A. Sell before leavingYes, in full | B. Rent out, sell from overseasNone, not even for the years she lived there | C. Come back, sell within 6 yearsYes, in full, under the 6-year rule |
| 50% discount | A. Sell before leavingNot needed | B. Rent out, sell from overseasCut to about 22.2% | C. Come back, sell within 6 yearsNot needed |
| Buyer holds back 15% | A. Sell before leavingNone, with a clearance certificate | B. Rent out, sell from overseas$135,000 | C. Come back, sell within 6 yearsNone |
| Priya’s tax on the gain | A. Sell before leaving$0 | B. Rent out, sell from overseas$68,198 total tax for 2024-25, which includes her $8,000 rent; on the net gain of $198,329 alone it would be $64,598 | C. Come back, sell within 6 years$0 |
If she sells before she leaves, there is no rent to tax, the home exemption applies, and with a clearance certificate the buyer holds nothing back. With the whole gain exempt, the 50% discount is not needed. Her tax on the gain is nil.
If she rents it out and sells later as a foreign resident, her rent is taxed at 30% from the first dollar, there is no home exemption, not even for the years she lived there, her discount falls to about 22.2%, and the buyer holds back $135,000 of the price. Her tax on the gain alone is $64,598.
If she comes back and sells as a resident within six years of moving out, the six-year rule can keep the home fully exempt, if she chooses to keep treating it as her main residence. With a clearance certificate the buyer holds nothing back. With the whole gain exempt, the 50% discount is not needed. While she was away, her rent was taxed at 30%; once back, at resident rates. Her tax on the gain is nil.
For Priya, that choice has passed: her six years from moving out ran to 30 June 2026. For someone leaving now, it is the one to weigh.
From 1 July 2027
A law already passed, the Tax Reform No. 1 Act 2026, changes capital gains tax for sales from 1 July 2027. For a foreign resident selling on or after that date there is no indexation, and no main residence exemption unless the life events test is met. Indexation means raising what the home cost you in line with inflation, so that less of the gain is taxed.
The discount is still the share of days you were a resident while you owned the home, as before. If you were never a resident while you owned it, there is no discount.
What people usually work out before they go
- what each asset is worth now, and which ones the leaving rule reaches;
- whether to rent the home out, sell it first, or keep it empty;
- how long they expect to be away, and whether they will come back within six years;
- what a sale from overseas would leave them, after tax and the 15% hold-back.
An accountant who knows both countries can put numbers against that list.
Moving overseas changes more than your address. If you want to talk it through before you go, your first call is free.
Nicholas Lockhart
Rules as at 27 October 2026 (Income Tax Assessment Acts 1936 and 1997, and the Taxation Administration Act 1953). Education only, not personal or financial advice.