Expat Property Exit Strategy Calculator for Australian Expats

Sarah moved to Singapore in 2018 for work. Smart with money, she knew Australian property was good for the long term. So she kept her Sydney apartment and rented it out, planning to move home one day.

When she sold in 2024, the expat tax bill shocked her: $127,000 in capital gains tax on a $380,000 gain.

Her accountant explained the problem. A 2020 law change had removed the main residence exemption she thought she had. Local property owners paid zero capital gains tax on their homes. Sarah (now classed as a foreign resident) paid expat tax on 100% of her gain. No 50% discount. No partial exemption. Full capital gains tax for Australian expats.

Many Australian expats are finding the same harsh reality. Laws changed while they were overseas. Nobody warned them. For many Australian expats, this means $50,000-150,000 in surprise capital gains tax on property sales. Before listing, benchmark your expected sale price with a property valuation so you know if CGT will hurt a great deal or a bad one.

The Main Residence Exemption: What Changed for Australian Expats

For decades, Australians had a simple main residence exemption. Sell your primary home, pay zero capital gains tax. If you moved overseas but planned to return, you could rent your former home and claim the exemption for up to six years.

This was basic expat tax knowledge. Move overseas for work. Keep your Australian property. Rent it out during the six-year window. Return home and either move back in or sell CGT-free. Many Australian expats built wealth this way.

Then 2020 happened. The government added a new rule: if you are a foreign resident when you sell, you no longer qualify for the main residence exemption. Period. It doesn't matter if you're an Australian citizen, coming back soon, or lived in the property for years.

Here is the key point: "foreign resident" for expat tax does not mean you gave up your passport. It means you have lived overseas long enough that the ATO sees you as a tax non-resident. For many Australian expats, this happens after 2-3 years abroad. Sometimes without their knowledge.

Capital Gains Tax Discount Issues for Australian Expats

Beyond the main residence exemption, capital gains tax discount eligibility for foreign residents is limited. It may not be available in full, based on when the gain happened and your residency during ownership. Check the current ATO rules for your situation.

Here are the numbers that hurt Australian expats with property investments:

Australian Resident Selling Investment Property:

• Purchase price (2015): $700,000
• Sale price (2025): $1,200,000
• Capital gain: $500,000
• Less 50% CGT discount: $250,000 taxable
• Tax at 45% rate: $112,500
• Net profit after tax: $387,500

Use our expat tax calculator to model your own scenarios. For a comprehensive breakdown of all the rules, see our expat property tax strategy guide.

Foreign Resident Selling Same Property:

• Purchase price (2015): $700,000
• Sale price (2025): $1,200,000
• Capital gain: $500,000
• No CGT discount for foreign residents
• Tax at 45% rate on full gain: $225,000
• Net profit after tax: $275,000

Difference: $112,500 extra expat tax just for being overseas

This is before we count the lost main residence exemption. If that property was your former home and you are caught by the 2020 rule change, you could pay capital gains tax that local investors pay zero on.

For a typical Sydney property going from $800,000 to $1,400,000 while you are overseas, that is $270,000 in capital gains. Without exemptions or discounts, you pay $121,500 in expat tax that a local Australian would pay zero on.

State and Territory Surcharges

Some states charge extra duties for certain owners (like "foreign owner" or "absent owner"). Rates, rules, and exemptions differ by state and change over time. Always check current rules on your state revenue office website. Get advice about your status before buying or while overseas. Use property data to research before investing.

The Six-Year Rule: Your Shrinking Window for Australian Expats

The main residence exemption's six-year rule let you treat a rented former home as your main residence while overseas. But after 2020, it became nearly useless for many Australian expats.

Here is why: the six-year window only helps if you are still an Australian tax resident when you sell. If you have been overseas long enough to become a foreign resident for expat tax (often after 2-3 years), the whole six-year benefit goes away.

Scenario 1: The Lucky One

• Leaves Australia in 2022 for a 4-year posting
• Rents out former home
• Returns to Australia in 2026 (year 4)
• Sells property in 2027 while back in Australia
• Result: Main residence exemption applies. Zero CGT.

Scenario 2: The Unlucky One

• Leaves Australia in 2019 for overseas work
• Rents out former home
• After 3 years abroad (2022), classed as foreign resident for tax
• Sells property in 2025 from overseas
• Result: Main residence exemption blocked. Full CGT applies.

The twist: the 2020 law change means if you are a foreign resident when you sell, the six-year rule does not save you.

Foreign Investment Rules (FIRB)

Foreign investment rules come from the Foreign Investment Review Board (FIRB). Whether FIRB approval is needed depends on your status and property type. If you are not sure whether FIRB applies to you, get advice and check the latest guidance at firb.gov.au.

Your Options as Australian Expats (Before You Leave Australia)

If you are thinking about moving overseas and own Australian property, you have a short window to plan your expat tax strategy. Once you are overseas and classed as a foreign resident, your capital gains tax options shrink a lot. Australian expats who plan ahead save the most by pairing this calculator with property market analysis of where prices are headed.

Option 1: Sell Before You Leave (Avoid Capital Gains Tax)

The cleanest solution for Australian expats. If the property was your main residence and you are still an Australian tax resident, sell it and pay zero capital gains tax. Take your capital overseas as cash. Invest it differently. Avoid all expat tax problems.

Pros:

• Zero CGT on sale
• No ongoing state surcharges
• No FIRB problems
• Complete freedom

Cons:

• Lose exposure to Australian property market
• Miss potential gains if market rises
• Harder to re-enter market from overseas

Option 2: Use the Six-Year Rule Well

If your overseas posting is truly short-term (3-5 years) and you will return to Australia, the six-year rule can still work. But you must keep Australian tax residency throughout or return before selling.

The Process:

• Move overseas but keep "Australian tax resident" status
• Rent out former home
• Return within six years
• Get residency back before selling
• Sell while Australian resident = zero CGT under main residence exemption

Important: You need professional tax advice to keep Australian residency status while overseas. Factors include keeping Australian bank accounts, owning property, showing intent to return, and limiting overseas ties.

Option 3: Time Your Sale Well

If you must stay overseas long-term but see the problem coming, selling early in your foreign residency might reduce the damage.

Example Timeline:

• Move overseas in 2024
• Year 1-2 (2024-2025): Likely still Australian tax resident
• Year 3+ (2026+): Likely foreign tax resident
• Best sale window: Late 2025/early 2026 before foreign status locks in

The key is getting tax advice early to know your specific timeline. Sell before the foreign resident status takes hold.

Option 4: Plan a Return to Australia

Some expats plan returns to Australia just to get tax residency back before selling property. If you can prove to the ATO that you truly returned and rebuilt your life in Australia, you can reset your tax residency status.

What You Need:

• Physical presence in Australia (usually 6+ months)
• Re-establish work or business ties
• Open/keep Australian bank accounts
• Show real intent to return
• Sell property while classed as resident

This is complex and needs professional advice. Getting it wrong means the ATO challenges your claim. You still pay foreign resident CGT rates.

Expat Tax Planning: The Pre-Departure Checklist

If you are planning an overseas move and own Australian property, work through this checklist with a qualified accountant BEFORE you leave:

6-12 Months Before Departure:

1. Get a Property Valuation: Set market value now. This becomes your cost base if you later sell as a foreign resident.

2. Calculate Capital Gains Tax Scenarios: Model what you would owe if selling as resident vs. foreign resident. Know the dollar impact of expat tax.

3. Review State Surcharges: Check whether extra duties or land tax surcharges apply to you. Factor these into holding costs.

4. Assess FIRB Effects: Know whether your property type and purchase timing create FIRB problems when you become a foreign resident.

5. Structure Ownership: Consider whether trust or other structures might help with expat tax (though these add complexity).

6. Document Residency Intent: If using the six-year rule, create evidence showing intent to return to Australia.

7. Consider Pre-Departure Sale: Run the numbers. Sometimes selling capital gains tax-free before leaving beats holding and paying big expat tax later.

After Departure:

8. Monitor Tax Residency Status: Do not assume you know your status. Get yearly professional checks.

9. Track Days in Australia: Keep records of time spent in Australia vs. overseas. This is critical for residency decisions.

10. Review Property Performance: Each year, assess whether holding property still makes sense given surcharges and potential CGT.

11. Plan Return Timeline: If using the six-year rule, know exactly when you need to return to keep the exemption.

12. Document Return Intent: Keep evidence of Australian ties: property, bank accounts, planned return, family connections.

Real Stories (Learn From Others' Mistakes)

Case Study 1: The Optimist

James moved to London in 2017 for a "two-year" job that turned into eight years. He kept his Melbourne apartment and rented it out. He planned to return "one day." He sold in 2025 from London, thinking the six-year rule protected him.

The Damage:

• Property bought: $550,000 (2012)
• Property sold: $980,000 (2025)
• Capital gain: $430,000
• James classed as foreign resident at sale = no main residence exemption
• CGT on full $430,000 at 45% rate = $193,500
• Victorian absent owner surcharge for 6 years: $24,000 × 6 = $144,000
• Total tax impact: $337,500

Had James sold before leaving or returned to get residency before selling, he would have paid zero CGT. His "keep it just in case" choice cost him $337,500.

Case Study 2: The Uninformed

Linda moved to New York in 2019. Her Sydney accountant never told her about the 2020 law change or state surcharges. She dutifully paid tax in Australia each year on rental income. She thought everything was fine.

In 2024, she sold her Sydney property and got a large combined bill for CGT and state charges she did not expect.

Case Study 3: The Strategic One

Marcus planned his Singapore move carefully. Before leaving in 2022, he:

• Got professional tax advice
• Calculated CGT effects of holding vs. selling
• Looked at surcharges while overseas
• Understood the 2020 law change killed his main residence exemption
• Made the hard choice to sell before leaving

Result:

• Sold property for $850,000 (bought for $620,000)
• Paid zero CGT under main residence exemption
• Banked $230,000 gain tax-free
• Invested proceeds in a mixed portfolio
• Avoided ongoing surcharges while overseas

Five years later (2027), his mixed portfolio is worth more than the Sydney property would have grown to. He has paid zero Australian property taxes the whole time.

When Holding Property Still Makes Sense

Despite the tax problems, some cases justify keeping Australian property as an expat:

You Are Definitely Returning Soon (2-3 Years)

If your overseas job is truly short and you will return within the six-year window, holding property makes sense. Especially in a growing market. Just keep Australian tax residency throughout.

Capital Growth Beats Tax Costs

If your property is in a very high-growth area (some Brisbane suburbs grew 40-50% recently), the gains might beat even the harsh foreign resident taxes. See our apartment hunting tips for finding high-growth areas.

Example: Property grows $300,000 over five years. You pay $120,000 in foreign resident CGT plus $90,000 in state surcharges. Net gain: $90,000. Still better than selling before you left and earning 4% yearly in cash ($80,000).

You Have No Choice

Sometimes life forces you overseas suddenly: health crisis, family emergency, work transfer. You might not have time or mental space to sell property while dealing with big life changes. You hold property and deal with tax later.

You Plan a Strategic Return

If you can time a return to Australia to get residency before selling, you might work the system well. This needs careful planning and professional advice. But it is possible.

The Hard Truth for Australian Expats and Expat Tax

Here is the reality that most people do not tell you: moving overseas for work might cost you $50,000-300,000 in expat tax on property if you own Australian real estate.

For high-income workers, this might still be worth it. The overseas salary, career growth, and life experience justify the capital gains tax hit. But you should make that choice knowing the costs. Not find out when the expat tax bill arrives years later.

The Australian government's position is clear: they want to stop foreign ownership of Australian property. Even when that "foreign owner" is an Australian citizen working overseas. The 2020 law changes and state surcharges are not accidents. They are policy meant to hit non-residents.

Whether this policy is fair is debatable. What is not debatable is that it exists. It is expensive. And many Australian expats are learning about it the hard way.

Your Pre-Departure Action Plan

If you are thinking about moving overseas:

Step 1: Get professional tax advice from an accountant who knows expat tax. Not just your regular accountant.

Step 2: Calculate the actual cost of holding your property as a foreign resident: state surcharges, potential CGT, lost main residence exemption.

Step 3: Model scenarios: sell now and pay zero, hold and pay later, strategic return and sell.

Step 4: Make a smart choice based on numbers, not feelings or guesses.

Step 5: If holding property, set up a system to track tax residency status and property performance yearly.

Step 6: Document everything: your intent to return, ties to Australia, time in each country. You may need this for ATO review.

The difference between expats who handle this well and those who get hit by surprise tax bills is simple. The successful ones planned ahead with expert advice. The hit ones assumed the rules had not changed or did not apply to them.

Do not be the latter.

The Question Nobody Wants to Answer

Is Australian property ownership worth it for long-term expats?

For many, the honest answer is no. Between no CGT discount, lost main residence exemption, state surcharges, and the stress of managing property from overseas, the numbers often do not work.

A Sydney property that grows 5% yearly might seem good. Until you add up surcharges, tax on sale, and what you could have earned elsewhere. The net result can be lower than you thought.

Compare that to simply selling CGT-free before leaving. Put the money in a mixed portfolio earning 7-8% yearly with no hassle. You will often find the non-property path gives better wealth for long-term expats.

But (and this is key) every situation is different. Your specific circumstances, property location, holding period, career plans, and return intentions all affect the best strategy. This is why professional advice is not optional. It is mandatory.

Final Thoughts: The Australian Expats Property Paradox

The paradox of Australian expat property is this: the best time to structure it right is before you leave. When you are busy planning your move and not thinking about expat tax law. By the time most Australian expats realise they needed advice, they are already overseas. Already classed as foreign residents. Their options have collapsed.

If you are reading this before you have left Australia, you are in the lucky minority. Use this window. Get expat tax advice. Model capital gains tax scenarios. Make smart choices. Structure correctly. Document everything.

If you are reading this from overseas wondering why nobody told you about these rules, you are in the unfortunate majority. Get advice now about your options. They are limited, but they exist. Selling might trigger painful capital gains tax. But holding while foreign surcharges pile up might be even worse.

And if you are thinking about returning to Australia just to get residency before selling property, get professional advice on timing and evidence needs. The ATO looks closely at these arrangements. You need to prove real return intent. Not just an expat tax trick.

The 2020 law change caught many Australian expats off-guard. It changed decades of established expat tax treatment. The main residence exemption that protected generations of Australian homeowners suddenly disappeared for expats. Often affecting people already overseas.

The government's position is that if you are not living in Australia, you should not get the same tax benefits as residents. Fair or not, that is the policy. Australian expats must handle it well or pay the price.

Do not let a $50,000+ surprise capital gains tax bill be how you learn these rules exist. For those returning to Australia to buy, check our guide on government home schemes that can reduce your upfront costs. If you're weighing whether to buy or continue renting while investing elsewhere, see our rentvesting calculator comparison.