One of the changes as part of the governments housing affordability package announced in the 2018 budget was to limit the primary residence capital gains exemption to resident tax payers only.
On the face of it this policy was aimed at reducing foreigner demand for housing but it has also inadvertently (or not) targeted Australian expats who are working overseas. The problem arises where expats are no longer classified as a resident for tax purposes.
Currently resident tax payers are covered by what is known as the 6 year rule which means they are able to rent out their primary residence for up to 6 years and still qualify for the primary residence capital gains exemption when they sell their home.
This will no longer be the case if the new legislation passes a senate committee inquiry.
Opponents have argued that the legislation goes against the grain of fair tax law and that it will discourage local investment from Aussie expats.
The current concession will be grandfathered until 30 June 2019.