Selling property in Australia as a foreign resident comes with extra tax rules and missing even one step can cost you thousands.

Whether you’re new to the process or think you’ve got it covered, here are the most common (and avoidable) mistakes we see foreign sellers make when it comes to capital gains withholding tax. Don’t let a paperwork error delay your sale or shrink your refund.

1. Not Realizing You’re Classified as a Foreign Resident

Many sellers assume if they’ve lived in Australia before, they count as an Australian resident for tax purposes. But tax residency is different from visa status or citizenship.

Mistake: Skipping the residency check.

Fix: Use the ATO’s online residency tool or speak to a tax agent to confirm your residency before selling.

2. Missing the Clearance Certificate Deadline

If you’re an Australian resident for tax purposes and forget to apply for a clearance certificate, the buyer is required to withhold 15% of your sale price – even if you shouldn’t be subject to it.

Mistake: Leaving the clearance certificate to the last minute.

Fix: Apply for it well before settlement – the process can take time.

3. Assuming You’ll Automatically Get the Withheld Amount Back

The withheld tax (usually 15%) doesn’t just come back on its own, you need to lodge a tax return to report the sale and claim your refund.

Mistake: Not lodging your return after settlement.

Fix: File your Australian tax return for the year of sale, even if you’re no longer living in Australia.

4. Selling Below Market Value Without a Valuation

If you’re selling to a friend or family member at a discount, the ATO may assess the market value (not the sale price) when calculating the withholding.

Mistake: Using the discounted sale price for tax calculations.

Fix: If it’s a non-arm’s length sale, the buyer must get a professional valuation and

withhold tax based on that.

5. Forgetting to Apply for a Variation (When You Could Pay Less!)

If you know you’re making a loss, or your actual gain is small, you don’t always have to pay the full 15%.

Mistake: Not applying for a withholding variation.

Fix: Submit a variation request to the ATO before settlement to potentially reduce the amount withheld.

6. Confusing Contract Date with Settlement Date

The withholding rate (12.5% vs 15%) depends on the contract date, not the date of settlement.

Mistake: Thinking your 2024 contract means 2024 rules, when the contract was actually signed in 2025.

Fix: Double-check your contract signing date to know which rate applies.

7. Not Getting Tax Advice Early

Selling property is a big move and taxes can get complicated fast. Many sellers only seek advice after the transaction, which often leads to missed refunds or late paperwork.

Mistake: Waiting until after the sale to get help.

Fix: Talk to a tax expert before you sign the contract. It could save you a lot of time (and money).

Avoid the Headaches – Get It Right from Day One

Foreign property sellers face more hoops than locals but with the right prep, the process doesn’t have to be stressful.

At Precent, we help you:

• Understand if the 15% withholding applies to you

• Apply for clearance or variation certificates

• Lodge your return and claim refunds quickly

Get in touch early so you don’t leave money on the table.