Planning to sell your home from 2025?
There's an important new rule you need to be aware of. Starting the beginning of this year (January 1, 2025), all property sales in Australia will require a capital gain withholding clearance certificate from the Australian Taxation Office (ATO).
Previously, this rule only applied to properties sold for $750,000 or more, but now it applies to all property sales, regardless of price.
Key Changes:
- No More $750,000 Limit: The capital gains withholding clearance certificate rule now applies to all property sales, regardless of the sale price.
- Higher Withholding Rate: Without a clearance certificate, buyers must withhold 15% of the sale price and send it to the ATO.
These changes aim to ensure that foreign residents pay their fair share of capital gains tax. However, even Australian residents need to complete the form to avoid delays and financial headaches.
What Sellers Need to Do:
- Make sure the name matches your title: If you have changed your name, you should update your details with the ATO before applying for a clearance certificate & ensure you use your legal name. REIWA has provided some additional details here: Name mismatches are delaying clearance certificates – don't risk 15 per cent of your sale price being withheld
- Apply for a Clearance Certificate Early: As soon as you decide to sell, apply online with the ATO. Most certificates are issued quickly, but it can take up to 28 days. The certificate is valid for 12 months, so you don't have to wait until you find a buyer. Once you have read through the details, you can apply for the clearance certificate from the ATO’s website: Australian residents and clearance certificates | Australian Taxation Office
- Provide the Certificate to the Settlement Agent: Ensure the buyer receives your clearance certificate before settlement. Otherwise, they will need to withhold 15% of the sale price and send it to the ATO. Ensure you send a copy to your settlement agent.
Why It Matters:
Without a clearance certificate, reclaiming the withheld 15% can take time. You'll need to lodge a tax return to get your money back, which could delay your access to funds after the sale. More information is also available from the ATO’s website: Capital Gains Withholding Clearance Certificates.
Looking to Sell ?
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