How to Reduce Capital Gains Tax when Selling Property as an Australian Expat: The Carry Forward Concessional Contributions
Key points
Reduce taxable income: Eligible Australian expats may be able to use carry forward concessional super contributions to reduce taxable income in the financial year they sell an Australian property.
Contribute to super: Depending on your eligibility and unused contribution caps, you may be able to contribute up to $175,000 in the 2026–27 financial year and claim a tax deduction.
Plan before selling: Your tax residency, superannuation balance, contribution eligibility and property sale timing can all influence whether this strategy is suitable for your circumstances.
How to Reduce Capital Gains Tax when Selling Property as an Australian Expat
Selling property as an Australian Expat can have significant tax implications, particularly if you have accumulated a substantial capital gain. However, there may be a strategy worth considering before you finalise the sale: making additional concessional contributions to your Australian superannuation fund.
For eligible expats, carry forward concessional contributions may help reduce taxable income in the financial year of a property sale, potentially reducing the tax payable on a capital gain. Depending on your circumstances and available contribution cap amounts, you may be able to contribute up to $175,000 in a single financial year.
In this blog, we explain how to reduce capital gains tax when selling property as an Australian Expat by using a carry forward concessional contribution strategy, including how it works, who may benefit and what you should consider before selling your Australian property.
Understanding Capital Gains Tax when Selling Property as an Australian Expat
When selling property as an Australian Expat, your Australian tax residency status is one of the first things to consider.
Foreign residents generally remain subject to Australian capital gains tax (CGT) on taxable Australian property, including Australian real estate. They generally cannot access the main residence CGT exemption for CGT events occurring after 30 June 2020, subject to limited exceptions.
The tax payable depends on factors including your capital gain, acquisition and ownership dates, eligible expenses, tax residency and other assessable income.
Superannuation planning may help. Rather than reducing the capital gain itself, a deductible concessional super contribution may reduce your taxable income, potentially reducing the tax payable on that gain.
What are Carry Forward Concessional Contributions?
Australian superannuation rules allow eligible individuals to use unused concessional contribution cap amounts from up to five previous financial years. These rules are sometimes referred to as the “catch-up” contribution rules.
Concessional contributions include employer super contributions, salary sacrifice contributions and personal contributions for which you claim a tax deduction.
The annual concessional contributions cap for the 2026–27 financial year is $32,500. If you have sufficient unused cap amounts from previous years, you may be able to contribute significantly more than the standard annual cap.
How could you contribute up to $175,000 in one financial year?
The following table illustrates how the potential $175,000 total is calculated, assuming all concessional cap amounts from the previous five financial years remain unused.
Financial year | Annual concessional cap |
|---|---|
2026–27 (current year) | $32,500 |
2025–26 | $30,000 |
2024–25 | $30,000 |
2023–24 | $27,500 |
2022–23 | $27,500 |
2021–22 | $27,500 |
Potential total | $175,000 |
This is a theoretical maximum, not an amount available to everyone. To use carry-forward amounts, your total superannuation balance must generally have been less than $500,000 at 30 June 2026. Your actual available amount depends on your contribution history, including employer contributions and any other concessional contributions already made. Unused amounts expire after five years.
You can check your available contribution caps through ATO online services.
So, how can this reduce capital gains tax when selling property as an Australian Expat?
When Selling Property as an Australian Expat, the objective is to consider whether a deductible super contribution can reduce the taxable income arising from the sale.
A personal super contribution is not automatically tax deductible. You must meet the relevant requirements, including providing a valid notice of intent to claim a deduction to your super fund and receiving its acknowledgment.
If the deduction is available, the contribution may reduce your taxable income and potentially the tax payable on your capital gain. The capital gain itself does not decrease.
Example: Selling Property as an Australian Expat
Consider an Australian expat living in Singapore who sells an Australian investment property during the 2026–27 financial year.
After accounting for the cost base and eligible expenses, the sale results in a capital gain of $200,000. Assume the individual has sufficient unused concessional contribution caps to contribute $175,000 and is eligible to claim a deduction for the full contribution.
Without contribution | With contribution | |
|---|---|---|
Capital gain | $200,000 | $200,000 |
Deductible super contribution | $0 | $175,000 |
Illustrative remaining taxable amount | $200,000 | $25,000 |
In this simplified example, the contribution reduces the illustrative taxable amount from $200,000 to $25,000. The capital gain remains $200,000, but the potential taxable income is substantially lower.
Based on the assumptions in this example, the Australian income tax payable without making a super contribution would be approximately $65,350 under the current foreign resident tax rates.
By making a deductible concessional contribution of $175,000, the individual's Australian income tax could reduce to approximately $7,500. The contribution would also incur $26,250 in contributions tax within the superannuation fund, calculated at the standard 15% rate.
This brings the combined tax liability to approximately $33,750, compared with $65,350 without the contribution. That represents a potential tax saving of $31,600.
The actual tax saving will depend on the individual's tax residency, other Australian assessable income and eligibility to claim a deduction for the contribution.
Don't Forget the 15% Foreign Resident Withholding Tax
When Selling Property as an Australian Expat, it is important to understand the foreign resident capital gains withholding rules.
For property sale contracts entered into on or after 1 January 2025, the withholding rate is generally 15% of the sale price, with no minimum property value threshold. The amount is withheld at settlement and paid to the ATO unless an applicable exception or variation applies.
This withholding is not the final CGT liability. It is a payment towards the vendor's Australian tax obligations, with the final position determined through the relevant tax process. Eligible vendors may be able to apply for a variation to reduce the amount withheld.
Importantly, withholding is calculated on the sale price, not the capital gain. This should be considered when planning the cash flow required for a super contribution.
Is this Strategy right for you?
Carry forward concessional contributions can be a valuable planning opportunity, but they are not suitable for everyone.
If you are considering how to reduce capital gains tax when selling property as an Australian Expat, review the following:
Contribution eligibility: Check your total superannuation balance, unused caps and existing employer contributions.
Tax position: Confirm whether you can claim a deduction and how it affects your Australian taxable income.
Cash flow: Money contributed to super is generally subject to preservation rules and may not be readily accessible.
Timing: Coordinate the property sale, contribution and tax planning well before the end of the financial year.
Overseas tax implications: Your country of residence may treat Australian super contributions differently, so local tax advice may be necessary.
Plan ahead before selling your Australian Property
Selling property as an Australian Expat can create a significant Australian tax liability, but the right planning may help improve the outcome.
Carry forward concessional contributions may allow eligible expats to contribute substantially more to super in one financial year, potentially reducing taxable income and the tax payable on a property-related capital gain.
The key is to assess your contribution limits, tax residency, deduction eligibility and property sale timing before acting.
At Runway Wealth, we help Australians living overseas understand their Australian financial position and make informed decisions about property, investments, superannuation and tax planning. If you are considering how to reduce capital gains tax when Selling Property as an Australian Expat, seeking advice before making any decisions or transactions can help you identify opportunities and avoid costly mistakes.
Runway Wealth Management is the trusted Financial Adviser to the Australian Expat community. Our tailored advice is backed by expertise, education and experience, which allows us to be at the forefront of Australian Expat Financial Planning.
If you would like to speak to one of our Expat Financial Advisers about this blog or if you have other queries, we would be more than happy to speak with you. Feel free to send us an enquiry through the ‘Contact Us’ tab provided in the link below:
General Advice Disclaimer: The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances, and objectives. We recommend you obtain professional financial advice specific to your circumstances.
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