Selling property abroad as an Australian. What you need to know.

Selling a property in Australia can be a complex process whether it's the first property or the tenth. Now imagine this process in a completely different country which is subject to different laws and regulations, language, and currency.

Overall, while the process varies across different countries, understanding local regulations and getting professional and legal help are fundamental.

This article will take you through the basics on selling your foreign property using the United Kingdom as an example, plus cover some other key things to consider in the process. Let’s jump right in.

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Note: This article is purely for general information purposes and is not to be taken as financial advice. We recommend that you obtain independent financial advice before making any form of decision.

Understanding the basics of selling property abroad as an Australian

Before you decide to sell an overseas property as an Australian, being realistic about timeframes is the first basic consideration before jumping into the sales process. How long it takes will depend on the country where the property is and the law surrounding property sales. For example, in the UK, the sales process can take between 2 to 3 months.¹

Due to this, it’s imperative to know how you plan the selling process overseas. This could mean travelling or staying where your property is and involving yourself in the sales process or appointing a Power of Attorney (PoA) to represent you. POA’s can²:

• Act legally on your behalf as part of the sales process
• Draft and sign required documents
• Open or manage your local accounts

How you decide to start the process will be based on your current circumstances.

Do I have to pay tax in Australia on property sold overseas?

When you sell a property abroad, your capital gains are treated the same as any capital gains made in Australia. This tax is called Capital Gains Tax (CGT) and is calculated based on the sale if a gain has been made. This tax applies to more than just property but could also be on shares, and any other type of investment.³

There are a few ways that you could be exempt from paying CGT or lower the overall amount of tax you owe. These are as follows.

Double Tax Treaties

Double Tax Treaties or Double Tax Agreements (DTA) are bi-lateral agreements made between different countries to prevent being taxed twice across jurisdictions. Australia has tax treaties with 40 other countries. Tax residency plays a role in where someone is obligated to pay tax.⁴

Foreign Income Tax offset (FITO)

This scheme provides a relief from paying taxes in Australia if you have already paid tax in another country based on your assessed Australian Income for a given financial year. Many countries have a different tax year, so if you spend a portion of that year in a given country and then return to Australia, you may be eligible for FITO.⁵

Whether or not you are subject to capital gains, on your yearly Australian tax return, you may still need to report the sale to the Australian tax authorities. It’s important to consult a local tax accountant or lawyer to give you the correct guidance on your options.

Preparing your property for sale overseas

Before you even think about selling your property overseas, there are a few things to consider before engaging the relevant professionals. These considerations can include:

• Is it the right time to sell?
• Are there any outstanding mortgage repayments?
• What are the anticipated costs of selling?

Once all major factors are considered and a decision has been made, it will be time to prepare the property for sale. Generally, you’ll need to:

• Have the property cleaned and spruced up
• Carry out any minor repairs
• Have the property valued professionally
• Get photographs for the property advertisement

Sometimes having a property staged to showcase all its features in the best light can make a difference when it comes to finding the right seller. Engaging a reputable and knowledgeable estate agent can facilitate a more streamlined sales process, meaning you can just wait for the offers to come in.

The sale process

The sales process of a property varies between each country depending on whether you are a resident, dual citizen or non-resident in a country. If you have a property in the UK and are ready to sell, you’ll find that the sales process is quite similar to that in Australia.

Generally, the process involves¹:

• Engaging an estate agent and lawyer

• Deciding on the selling price range

• Organising viewers to see the property

• Receiving an offer or offers by potential buyers

• Negotiate to find an agreement between buyer and sellers

• Draw up the final sales contract

• Both parties sign all required documents

This process might vary if you own a property with multiple parties or own a heritage listed property.

Closing the deal and receiving payment

When the sale has been finalised, you will likely receive the proceeds of the property sale into a local account. Once you receive the funds, the tricky part begins if you need to get the money back to Australia.

There are a few ways that you can facilitate this including:

• Move the funds in cash
• Sending via an International bank transfer
• Sending via an International money transfer provider

Here is a breakdown of the different methods listed above.⁶

Moving or shipping cash	International Bank Transfer	Other Money Transfer methods
Moving the profits in cash in some way is exactly as it sounds. Although it is possible and depends on how much will be moved, this method can be incredibly risky to facilitate if moving high amounts. Large amounts – AUD $10,000 or more in Australian dollars, or the foreign currency equivalent – require declaration to Australian customs or border force.	This method is also known as telegraphic transfers where money is moved from bank to bank transfers using the SWIFT network to facilitate the transfer. This method comes with extra fees as SWIFT member banks are utilised to process the route of the transfer and may charge their own fees.	There are other Money Transfer providers that move money using their own network. Providers include: Wise Western Union OFX Paypal Payoneer These providers charge their own fees to send money.

Read more: Tax Implications of Transferring Money from Overseas to Australia

A word on currency exchange rates and international transfer fees

Unfortunately, the caveat to transferring money abroad, whether to Australia or back out is that usually the transactions will incur different fees. These fees can be found in foreign currency exchange rates, commonly called margins and international transfer fees. If you are not careful, these fees can take a good chunk of your funds.⁶

To see an example of how much a standard transfer may cost, you can check out the Wise Pricing Calculator.

Are there limits on how much can be brought into Australia

There are no restrictions on how much you can bring into Australia, however any cash amounts over $10,000 AUD will need to be declared to the Australian authorities. All declarations should be made at least 5 days before receiving an international transfer or crossing the border. If someone fails to declare an amount above $10,000, penalties will apply.

There is no limit on how much you can transfer between bank accounts or other international money transfer providers.⁷ However, before you decide to make a transfer to an Australian account, you should consult with your bank about their limits.⁸

Conclusion

As an Australian with foreign property ownership, getting to know your obligations across both jurisdictions will be beneficial when you decide to sell. If you are a tax resident in Australia, you will be subject to CGT if a profit is realised after the sale. Those looking to send the money back to Australia will need to declare amounts exceeding $10,000 in cash or non-cash forms to the Australian authorities to avoid a penalty.

If transferring from bank to bank, or using another electronic money transfer service, there is no limit imposed by Australian authorities. It is also important to keep in mind that you may be charged a range of fees when sending the money back to Australia.

Send money the Wise way

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This article is purely for general information purposes and is not to be taken as financial advice. We recommend that you obtain independent financial advice before making any form of decision.

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Sources:

1. UK Gov selling house
2. UK Gov POA
3. ATO CGT owing
4. ATO Tax treaty
5. ATO FITO
6. Money Smart sending money
7. ATO international transfers
8. AUSTRAC moving money

Sources checked on: 21 November 2023