Doing a Stint Overseas? Know How the 2026 CGT Changes Affect Your Australian Property

The information contained within does not constitute financial, legal, or tax advice. Reach out to a qualified professional to discuss your specific circumstances before making investment decisions.

If you've ever worked overseas and given up Australian tax residency along the way, a change buried in this year's Federal Budget may deserve your attention. From 1 July 2027, that stint abroad could cost you access to the recently-updated Capital Gains Tax (CGT) discount on your Australian investment property - not just for the years you were offshore.

What's changing?

As reported in the AFR last week, the government is replacing the flat 50% CGT discount with a cost-base indexation regime. Under the current rules, the discount is applied pro-rata: an Australian who owned a property for 30 years but was a non-resident for 3 of them could still claim the discount for the other 27.

The new regime doesn't work that way. Any period as a foreign resident during the time an asset was held disqualifies the owner from the indexation benefit altogether, even if that period was a fraction of decades of Australian tax residency either side of it.

As tax specialist Ben Turner puts it: "a relatively short period of overseas employment may prevent access to the new indexation regime for that property, despite decades of Australian tax residency beforehand."

What this means for expats with property back home?

For anyone who currently holds, or plans to hold, an Australian investment property and has spent, or will spend, any time as a non-resident during ownership of it, this change is worth understanding properly before 1 July 2027. Practical questions expats may discuss with their tax specialist may include:

• When did (or will) my period of non-residency begin, and does it fall within the ownership window of the property?

• How much of the eventual capital gain will actually fall under the new indexation test?

• Are there structuring or timing decisions, made ahead of the rules taking effect, that could materially change the outcome?

These aren't questions with generic answers. They depend on an individual's residency history, timeline for returning to Australia, and how the property was and will be held.

Get the right advice

This is exactly the kind of issue where a short conversation with a specialist can save a lot of money down the track. Ben Turner and his team regularly advise Australian expats on structuring their property and tax residency to avoid traps like this one.

At CORALA, Australian expats buy investment property back home with the same rigour: data-driven decisions, local execution, and a trusted network of expat-specialist advisors, including tax specialists like Ben, lending brokers, conveyancers and property managers. For anyone weighing up a purchase, or already holding Australian property and wanting to understand how these changes apply, reaching out could be a good next step, this is exactly the kind of thing CORALA’s Home Ground Advantage network exists to help expats navigate.

A note from us

CORALA believes an Australian professional who takes a two- or three-year posting overseas, fully intending to come home, and who pays Australian tax for the rest of their career, is doing something that plainly benefits both their own career and the country. Global experience, international networks, skills brought back home: this is the kind of mobility that strengthens Australia.

It's hard to see why that behaviour should be penalised. That's why CORALA is working with its network of expat advisors to develop a campaign to the Australian Government, calling for a pro-rata approach to indexation eligibility that mirrors the existing CGT discount rules, so that a genuine, temporary period of non-residency doesn't erase decades of Australian tax residency at the stroke of a pen.

Anyone who shares this view, whether an expat planning a return home or an advisor working with clients in this position, is welcome to add their voice. The stronger the case put to government before 1 July 2027, the better the odds of a fairer outcome. Reach out to the CORALA team today to add your voice to the campaign.