Maria Pawelek is one of thousands of Australian expats who fears she could be hit with large capital gains tax bills.
Key points:
- Before December’s changes, Australians living abroad had been able to claim the capital gains tax exemption on their home
- The Government had given expats until June 30 to sell their homes to avoid big tax bills
- Expats say travel bans and social-distancing measures have made selling their homes before June 30 impossible
Due to COVID-19 social-distancing measures, she’s been unable to sell her family home before a June 30 deadline that would have allowed her to avoid liabilities.
For decades, Australians living abroad have been able to claim the capital gains tax (CGT) exemption on the family home.
But the Federal Government in December introduced changes that mean thousands of expats could be up for big tax bills, unless they sell their homes before June 30.
The change was flagged in the May 2017 federal budget as a housing-affordability measure designed to save $581 million.
It eliminates the CGT exemption for Australian expatriates that has been in place since September 20, 1985.
The measure received much criticism from the expat community and their advisers, causing the Federal Government to delay its introduction several times.
When it finally passed Parliament in December, the law included a six-month reprieve so foreign residents who already held property on May 9, 2017 would be able to claim the CGT main-residence exemption as long as they sold their property on or before June 30, 2020.
If expats do not sell by June 30, the tax bill will date back from the time the owner purchased their home, not the point at which they moved overseas, which means many could be left with hefty bills.
Ms Pawelek told ABC News she and her husband now faced that very predicament.
Attempts to sell their Sydney home last month came to an abrupt halt after the Federal Government in mid-March introdu