From 1 January 2025, the Foreign Resident Capital Gains Withholding (FRCGW) rules are changing, impacting all property transactions in Australia.
Currently, Australian residents selling property must provide a clearance certificate to the purchaser at or before settlement to avoid 12.5% withholding on property sales above $750,000. However, under the new rules:
- The withholding rate will increase from 12.5% to 15%
- The $750,000 threshold will be removed, meaning the withholding rules apply to all property sales
These changes apply to contracts entered into on or after 1 January 2025.
What This Means for Property Sellers
- All Australian residents selling property must provide a clearance certificate from the ATO before settlement, or the buyer must withhold 15% of the sale price and pay it to the ATO.
- If withholding applies, the seller can only claim a refund after lodging their next tax return.
- Most clearance certificates are issued within a few days, but some may take up to 28 days—so apply early! Certificates are valid for 12 months and can be obtained before signing a contract.
- Foreign resident vendors may be able to apply for a variation of the withholding rate.
Selling property? Don’t get caught off guard by these changes.
At W Wen & Co, Chartered Accountants and Business Advisors, we help clients navigate complex property tax obligations to ensure compliance and avoid unnecessary withholding.
📞 Contact us today at 02 9871 3429 for expert advice!