Written by

Steven Lee

Mortgage Director, ODIN Mortgage & Tax

10+ years in Australian banking and mortgage lending

Last reviewed

Updated on: September 29, 2026 View profile →

What exactly is deemed disposal, and why does it matter for expats?

Deemed disposal is the ATO’s mechanism for taxing capital growth that accumulated while you were an Australian resident. When you cease Australian tax residency, most CGT assets you hold are treated as if they were sold at market value on the date you departed ^[1][3]. No actual transaction occurs, but the tax liability is real.

This matters because many expats are unaware the liability exists until they file their final Australian tax return. The most common assets caught by deemed disposal include:

• Foreign shares and managed funds held personally
• Cryptocurrency
• Foreign real property
• Interests in foreign trusts or companies

A capital gain arises if the market value at the deemed disposal date exceeds the asset’s cost base ^[2]. The 50% CGT discount applies if the asset was held for more than 12 months at that point, provided you were an Australian resident for tax purposes during that period ^[6].

Does deemed disposal apply to Australian property?

Building on that list of affected assets, this is where Australian property owners get a crucial distinction. Australian real property is classified as taxable Australian property and is specifically excluded from the deemed disposal rules ^[5][4]. This means your Australian investment property or home does not trigger a CGT event simply because you move overseas.

However, exclusion from deemed disposal is not the same as freedom from CGT. It means the opposite: Australian property remains inside the Australian tax net permanently, regardless of your residency status. When you eventually sell that property as a non-resident, you will be assessed for foreign resident capital gains tax on any gain made.

What changed for foreign resident capital gains from 1 January 2025?

A related but distinct concern for Australian property owners is the foreign resident capital gains withholding (FRCGW) regime. From 1 January 2025, the rules tightened considerably ^[8]. Key changes include:

• The withholding rate increased for foreign resident vendors.
• The property value threshold below which withholding did not apply was removed, meaning the rules now apply to all real property transactions involving foreign residents regardless of price ^[8].
• Buyers of Australian property from foreign resident vendors are required to withhold and remit an amount to the ATO at settlement, subject to change and depending on lender and ATO policy at the time of transaction.

These changes have practical implications for both selling and buying. If you are selling an Australian property as a non-resident, your buyer is required to withhold a portion of the sale proceeds. You would then claim a credit for that withheld amount in your Australian tax return. Specific withholding rates and thresholds are subject to change and depend on lender and ATO policy at the time of the transaction ^[8].

Can you elect to defer the deemed disposal liability?

Stepping back from the property-specific rules, the deferred liability question is important for expats with significant non-property assets. Rather than paying CGT at departure, you may elect to defer the deemed disposal and continue to be treated as if you had not disposed of the assets ^[3]. Under this election:

• The assets remain subject to Australian CGT until you actually sell them.
• The 50% CGT discount generally will not apply to any gain accrued after you became a non-resident.
• This can be advantageous or disadvantageous depending on your future plans, the asset’s likely trajectory, and the tax treaty position of your country of residence.

The election is not automatic. It must be made, and the timing and mechanics matter. Whether deferral is the right approach depends entirely on individual circumstances and should be assessed with a registered tax agent.

How does this affect your Australian investment property strategy as an expat?

For expats who own or are planning to buy Australian property, the deemed disposal rules reinforce an important structural point: Australian property does not disappear from the ATO’s view when you leave. The CGT clock keeps running.

Practical considerations for expat property owners include:

• Cost base documentation: Record the market value of your property at the date you became a non-resident. This establishes the cost base for any future gain calculation.
• Main residence exemption changes: The main residence exemption for foreign residents was significantly restricted in recent years. Non-residents selling a former principal place of residence may not qualify for the full exemption. This is a complex area requiring specific Australian expat tax advice.
• Loan structure: The way your property is financed can interact with your tax position. Interest-only lending, offset accounts, and negative gearing structures all have tax dimensions that are best coordinated between your mortgage broker and tax agent from the outset.

This is where ODIN Mortgage’s integrated model becomes directly relevant. Because ODIN Mortgage operates alongside Odin Tax under ODIN, clients can have their loan structures and tax positions reviewed together rather than by separate firms who never speak to one another. For expats navigating both deemed disposal obligations and ongoing Australian property ownership, that coordination can prevent costly misalignments.

Frequently Asked Questions

References

1. CGT Leaving Australia: Essential Tax Guide for Emigrants (au.andersen.com)
2. Treasury Laws Amendment (Tax Reform No.1) Bill 2026 [and related Bill] [Preliminary Digest] – Parliament of Australia (www.aph.gov.au)