Selling & Exit: CGT Withholding for Foreign Owners

Whatever’s driving the decision to sell — market conditions, a change in plans, or simply reaching your intended exit — the tax mechanics for a foreign resident selling Australian property are genuinely different from what a local seller experiences, in ways that catch people out if they only think about it after accepting an offer. This guide doesn’t tell you whether now is a good time to sell; it explains what happens at settlement and at tax time so you can make that call with the full picture.

The headline change: 15% withheld at settlement, no threshold

Since 1 January 2025, when a foreign resident sells Australian property, the buyer’s representative is required to withhold 15% of the sale price — not 15% of your gain, the sale price — and remit it directly to the ATO. This replaced the previous regime (12.5%, with a $750,000 threshold below which no withholding applied); there is now no threshold, so it applies to every sale by a foreign resident regardless of value.

This isn’t optional and isn’t something you administer yourself: your buyer’s settlement agent or solicitor calculates and withholds it as part of settlement, the same way they’d handle any other settlement adjustment. The mechanism that lets Australian resident sellers avoid this withholding — an ATO clearance certificate — generally isn’t available to you if you’re a foreign resident for tax purposes, since the certificate exists specifically to confirm the seller isn’t a foreign resident.

Practically: budget for 15% of your sale price being unavailable to you at settlement. It’s not a final tax bill — it’s withheld as a credit against whatever your actual capital gains tax liability turns out to be once you lodge a return — but it does mean a large chunk of your proceeds is tied up until then, which matters for timing if you’re relying on that money for your next move.

The main residence exemption usually doesn’t apply to you

If this was genuinely your home, not an investment property, you might expect the main residence exemption to shield the gain from CGT the way it would for an Australian resident. It generally doesn’t. Since changes that took effect in December 2019, foreign residents are denied the main residence exemption on sale, even for a property that was genuinely lived in as a home — with a narrow exception (the “life events test”) covering specific circumstances like terminal illness, death, or divorce within six years of leaving Australia.

This is one of the most commonly missed traps for people who bought a home in WA, lived in it, then later moved overseas and became a foreign resident before selling. If that’s your situation, get advice on the life events test before assuming you’re exempt — it’s a narrow, specifically defined test, not a general grace period.

The 50% CGT discount generally doesn’t apply either

Australian residents who hold an asset for more than 12 months typically get a 50% discount on the taxable gain. Foreign and temporary residents generally don’t get this discount for gains accrued while they were a foreign resident, for assets acquired after 8 May 2012. If you were an Australian tax resident for part of your ownership period, an apportioned discount may apply to the portion of the gain that accrued during your resident period — this calculation isn’t simple, and is worth getting a tax agent to run properly rather than estimating yourself.

You still need to lodge an Australian tax return

The 15% withheld at settlement isn’t your final tax bill — it’s a credit. You (or your tax agent) still need to lodge an Australian income tax return declaring the capital gain (or loss), calculate what’s actually owed given your circumstances, and then either claim back the difference if too much was withheld, or pay more if the withholding didn’t cover your actual liability. Engage a registered tax agent experienced with non-resident CGT before you sell, not after — there’s genuine planning value in understanding your position ahead of settlement rather than finding out at tax time.

Check your original FIRB conditions before you sell

FIRB approval governs buying, not selling — there’s typically no separate approval required to sell your property. But if your original approval was conditional (for example, vacant land you committed to build on within a set timeframe, or an established dwelling you were approved to redevelop), make sure you’ve satisfied those conditions. Selling before fulfilling a condition your approval was granted on can be its own issue, separate from the CGT treatment covered here — see our FIRB guide if you’re unsure what conditions applied to your purchase.

The WA-specific mechanics

Duty is a buyer’s cost, not a seller’s, so you won’t pay WA transfer duty or the foreign buyers duty surcharge again when you sell. Your settlement agent handles the seller side of settlement — payout of any mortgage, adjustment of rates and (if applicable) land tax, and coordinating with the buyer’s representative on the FRCGW withholding — much the same process as your original purchase, just from the other side. See our legal process guide for how WA settlements work generally.

Related reading

• WA Foreign Buyer Duty & Tax Guide
• FIRB Approval Guide
• Legal Process & Settlement Guide