Changes to Property Withholding Rules for Australian Sellers Starting January 2025

In a significant update for the
Australian property market, the Australian Taxation Office (ATO) has announced changes to the Foreign Resident Capital Gains Withholding rules, effective January 1, 2025.

Currently, Australian residents selling property must provide a clearance certificate to the purchaser at or before settlement to avoid having 12.5% withheld from the sale proceeds if the property is valued at $750,000 or more.

However, the new rules will see the withholding rate increase from 12.5% to 15%, and the $750,000 threshold will be removed, meaning the withholding will apply to all property sales regardless of value.

To avoid the 15% withholding, sellers must obtain a clearance certificate from the ATO. The ATO advises applying early, as some certificates can take up to 28 days to issue.

These changes are meant to make sure everyone follows the rules and make property transactions easier for foreign residents. Sellers should stay updated and get ready for these changes to have smooth transactions. 

For more details, visit the ATO website.