Important Information for $2mil+ Home Owners Looking to Sell
Measures to regulate foreign investors in the Australian property market have been prevalent for some time now, but the latest initiative aimed to crack down on foreign property owners skirting capital gains tax will inevitably have a wider impact.
As of July 1st, all Australian owners of homes worth more than $2 million will have to prove their residency before selling their home, or be hit with a 10 per cent withholding tax. To do so, vendors of $2m+ homes will need to obtain a clearance certificate from the ATO, which confirms they are local residents – even if you’re a life-long local citizen.
How might this affect you?
Well, if you’re an owner of a home worth over $2mil, this clearance certificate could take over a month to receive if lodged on paper, which could add costly delays for anyone obviously not wanting to be hit with the 10% penalty.
Similarly, if you’re an Australian citizen looking to buy property from a foreign investor, this could delay proceedings, add red tape and confusion to those who are unaware or unprepared.
Peak legal bodies warn – “The initiative will generate uncertainty, delays and a significant administrative burden for Australians who purchase Australian property from foreign interests and Australians.”
Whilst the impact of this new provision (drafted in close collaboration by the REIA, Property Council of Australia, ATO, FIRB and Treasury) will have its strongest impact in Sydney and Melbourne, still 2.26% of Australian homes are expected to be affected – with much fewer currently aware of this.
At Vicki Philipoff Settlements, it’s our job to stay on top of everything happening in the Australian property market, and we aim to share any information that will make the process of buying or selling as easy as possible for Australians. Our property settlement and conveyancing services are specifically designed to ensure efficiency, reduce stress and the risk of processing errors or oversights.
For further information about the July 1st capital gains tax provision, or any general enquiries, please don’t hesitate to contact us today!