New Rule for Home Sellers in 2025 – What You Must Know!

If you’re considering selling your property, it’s essential to be aware of recent changes to the Foreign Resident Capital Gains Withholding (FRCGW) rules, which may impact your transaction.

What is FRCGW?

FRCGW is a tax measure designed to ensure foreign residents meet their capital gains tax obligations when selling certain taxable Australian properties. However, it also affects Australian residents selling property. When selling property in Australia, Australian residents must provide a valid clearance certificate to the purchaser at or before settlement. Without this certificate, the purchaser is required to withhold a portion of the sale proceeds and remit it to the Australian Taxation Office (ATO).

Key Changes Effective from 1 January 2025

As of 1 January 2025, the withholding rate has increased from 12.5% to 15% of the property’s sale price. Additionally, the previous threshold, which applied to properties valued at $750,000 or more, has been removed. Now, the 15% withholding applies to the sale of all properties, regardless of their value.

Implications for Australian Resident Sellers

If you’re an Australian resident selling property, it’s crucial to obtain a clearance certificate from the ATO and provide it to the purchaser before settlement. Failing to do so will result in the purchaser withholding 15% of the sale price and paying it to the ATO. This could significantly impact your expected proceeds from the sale.

Steps to Obtain a Clearance Certificate

1. Apply Early: Submit your application for a clearance certificate as soon as you decide to sell. The certificate is valid for 12 months, so applying early ensures you have it in hand well before settlement.
2. Complete the Online Form: The application can be completed online through the ATO’s website. Ensure all details are accurate to avoid processing delays.
3. Await Processing: While many certificates are issued promptly, some may take up to 28 days. Plan accordingly to accommodate this processing time.

Conclusion

Staying informed about these changes is vital to ensure a smooth property transaction. By obtaining the necessary clearance certificate in a timely manner, you can avoid unexpected withholding and make your next move a success.

Shane Bradbury

Hervey Bay is in my blood. I was born here and have lived my entire life in this wonderful location. This means I know the area like the back of my hand and can offer unparalleled insights into the local real estate market. With over 22 years of experience in Lending and Financial Services, I have a deep understanding of the importance of making the right decisions when it comes to one of your most important assets - your property. This is why I decided to expand my skillset and completed my Real Estate Certificate in 2019. Together with my partner Tara, we founded Active Agents Hervey Bay, where I have been working behind the scenes to establish a very successful Property Management business. Now, we are thrilled to be expanding our offering to clients in the Property Sales area. My commitment to delivering exceptional customer service, combined with my extensive knowledge of the local market, makes me the perfect partner for anyone looking to buy or sell a property in Hervey Bay. Whether you're a first-time buyer or an experienced investor, I will work tirelessly to help you achieve your real estate goals.

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