Get ready for some serious congestion in property sales:
Sellers of property worth $750,000 or more could face a 12.5 per cent tax on the proceeds under new ATO rules introduced to stop foreign property owners avoiding capital gains tax.
Mario Borg, principal of property consultant Mario Borg Strategic Finance, says Australian residents selling property will from July 1 need to provide a “clearance certificate” issued by the Australian Taxation Office to the purchaser on settlement of the sale to avoid the 12.5 per cent withholding tax.
Foreign resident sellers will have 12.5 per cent withheld and remitted to tax authorities.
“It applies to all sales of Australian property, including vacant land, buildings, residential and commercial property, options and leases,” warns Borg.
The federal tax threshold, which is intended to ensure overseas buyers do not avoid capital gains or other tax liabilities, has been lowered from $2 million and the rate raised from 10 per cent. Property sales during the 12 months to July 1 this year fall under the previous threshold and rate.
Anthony Cordato, principal of Cordato Partners, which specialises in property law, adds: “A lot of people do not appear to be aware of these changes. It has slipped under the radar. It is aimed at all sellers to combat tax avoidance by foreigners and tax evasion by Australian residents.”
