As usual at this time of year, it pays to keep an eye on any new tax rules that might come into effect over the coming years. And 2017 is no exception.
New tax rules relating to buying and selling property will be coming in to play from July 1 this year, affecting all properties, including vacant plots of land and residential or commercial properties with a market value of $750,000 and over.
So what’s happening?
When any property is put up for sale for over $750,000, the purchaser has to withhold 12.5% of the purchase price of the property and pay it to the Australian Taxation Office, unless the seller obtains a clearance certificate.
That 12.5% can end up being quite a significant amount of money, with $93,750 potentially being withheld on a property valued at $750,000.
Why is this happening?
The changes are aimed at foreign nationals owning property in Australia, making it less attractive for foreign nationals (for tax purposes) although it is important to note that the change will affect everyone entering into a sale, regardless of nationality.
What if I’m an Australian resident?
If you are Australian resident for tax purposes, you have to go online and apply for a clearance certificate from the ATO, which will remain valid for 12 months from the issue date and can be used for multiple sales over that 12 month period.
If you are automatically assessed as an Australian resident the certificate will be issued within a couple of days, however more complicated sets of circumstances might mean that there is a delay.
However, even if you are as Australian as the Jolly Swagman, you do still need to apply for a clearance certificate BEFORE you settle on a property.
Clark Real Estate’s Principal Agent Mario Lattanzi says, “It is imperative that the sales agent brings this change to the sellers attention and to make sure that the seller has the ATO Exemption Certificate in place before selling.”
Australian Residents can make an application by visiting this link
What now?
As agents, its our responsibility and job to advise anyone selling their property that they should apply for a clearance certificate as soon as possible.
It would be beneficial to apply for a certificate even if your property is expected to sell for less than $750,000, particularly if it is close to that value. It would save you getting an unpleasant shock come settlement time…
If you’re thinking of selling your property or need a hand understanding the new taxation laws, talk to one of Clark Real Estates specialist agents today. Our agents will advise you of all the changes and any requirements that you have as a seller to ensure you are protected from the changes.
