Australia levies 15% withholding on all foreign resident property sales

Foreign residents selling real estate in Australia face an immediate 15% tax withholding at settlement, after lawmakers eliminated the longstanding $750,000 property value exemption floor.

Zero threshold on foreign seller withholding

The Foreign Resident Capital Gains Withholding (FRCGW) regime tightened under the Treasury Laws Amendment (2024 Tax and Other Measures No. 1) Act 2024, which took effect Jan. 1, 2025.

Prior to that cutoff, buyers only withheld 12.5% on properties selling for $750,000 or more. Transactions below that dollar threshold required zero upfront tax remittance. Under the current rule, buyers must deduct a flat 15% from the purchase price across all taxable Australian property sales by foreign residents, regardless of how small the transaction value is.

The withholding covers:

• Residential and commercial real estate, including apartments and vacant land

• Mining, quarrying and prospecting rights

• Long-term leases over Australian real property

• Unlisted shares or units that confer a right to occupy Australian land or premises

Who gets caught and what sellers must do

The rules apply strictly to sellers deemed foreign residents for tax purposes at the time of disposal. Digital nomads, expats living abroad and non-resident property owners are directly affected, while tourists holding no local real estate face no impact.

Because the 15% is withheld from the gross contract price rather than the net profit, sellers who realize minimal gains or net capital losses will see substantial capital locked up at settlement. Anyone selling property must lodge a formal Australian tax return after the end of the financial year to reconcile their actual liability and recover excess funds withheld by the Australian Taxation Office (ATO). Remote workers reviewing their tax status in Australia should budget for this cash flow delay well before listing an asset.

Broader capital gains overhaul remains in draft

A separate package broadening Australia's foreign resident capital gains tax regime remains draft legislation as of 2026.

Announced in the 2024-25 Budget, the proposed framework aligns Australian law with OECD standards by expanding taxable assets to include property with a direct economic link to Australian natural resources. The draft legislation also extends the principal asset test to a 365-day testing window and mandates prior ATO notification for foreign membership sales exceeding $50 million.