Foreign residents who purchase or sell Australian property face a different CGT regime than Australian residents — including the Foreign Resident Capital Gains Withholding (FRCGW) regime, which requires purchasers to withhold 15% of the sale price at settlement unless a clearance certificate is obtained. In 2026, these rules apply to all Australian property sales regardless of the vendor's tax residency for Australian purposes. Here is what foreign purchasers and vendors need to know about CGT in 2026.

Foreign Resident Capital Gains Withholding (FRCGW)

From 1 January 2025, the FRCGW withholding rate increased to 15% of the gross sale price and the $750,000 threshold was removed — meaning withholding now applies to ALL Australian property sales where the vendor cannot produce a valid ATO clearance certificate, regardless of the value of the property.

  • Australian resident vendors: Must obtain an ATO clearance certificate (free, applied for online) to avoid the 15% withholding. Without it, the purchaser is required by law to withhold 15% and remit it to the ATO.
  • Foreign resident vendors: The 15% withholding is generally required. Vendors may apply to the ATO for a variation if their actual CGT liability is less than 15% of the sale price.
  • Purchasers: Are required to check vendor residency status and withhold if no clearance certificate is provided. Failure to withhold creates a liability for the purchaser.

CGT Rules for Foreign Residents Selling Australian Property

Foreign residents of Australia are subject to Australian CGT on "taxable Australian property" — which includes:

  • Direct interests in Australian real property (residential or commercial)
  • Indirect interests where more than 50% of the value of an entity is attributable to Australian real property
  • Business assets of an Australian permanent establishment

Unlike Australian residents, foreign residents cannot access the 50% CGT discount on gains accrued after 8 May 2012. If a property was held before that date, there may be a partial discount available for gains accrued in the pre-2012 period.

Foreign Investment Surcharges on Purchase

Foreign persons (as defined by the Foreign Acquisitions and Takeovers Act) must obtain FIRB approval before purchasing Australian residential real estate. Additional state-level surcharges apply on top of standard stamp duty:

  • NSW: 8% surcharge purchaser duty + 4% land tax surcharge
  • VIC: 8% foreign purchaser additional duty + 2% absentee owner surcharge
  • QLD: 7% additional foreign acquirer duty
  • WA: 7% foreign buyers duty

Frequently Asked Questions

What is the ATO clearance certificate and how do I get one?

An ATO clearance certificate confirms to the purchaser that the vendor is an Australian resident for tax purposes and that withholding is not required. Australian resident vendors should apply online through the ATO's website as soon as a sale is imminent — processing takes up to 28 days. The certificate is valid for 12 months. If you do not have a clearance certificate at settlement, the purchaser must withhold 15% of the sale price.

Can foreign residents access the CGT main residence exemption?

No. From 9 May 2017, foreign residents are no longer entitled to the main residence CGT exemption when selling Australian property — even if they lived in the property as their home while an Australian resident. There is a transitional rule for properties held before 9 May 2017 that were sold before 30 June 2020. After that date, no exemption applies.

Selling Australian property as a foreign resident or purchasing from a foreign vendor? Contact AWTS for specialist CGT and withholding tax advice.