Compliance
How Australia’s Foreign Resident Capital Gains Withholding Rules Impact Property Sellers in 2025
Learn how the 2025 changes to foreign resident capital gains withholding (FRCGW) affect property venders, and what steps to take now to avoid surprises at settlement.
By NomadicTax Research Team • 5-8 min read • November 22, 2025
## Understanding the 2025 FRCGW Changes
Australia’s FRCGW rules have been updated as of **1 January 2025**, shifting both the rate and threshold.
- The withholding rate has increased from **12.5% to 15%**.([grantthornton.com.au](https://www.grantthornton.com.au/insights/client-alerts/preparing-for-changes-to-australian-foreign-resident-withholding-tax-on-capital-gains-rules/?utm_source=openai))
- The de minimis threshold of **AUD $750,000** has been **removed**, so **all sales of taxable Australian property (TAP)** by foreign residents are now caught.([grantthornton.com.au](https://www.grantthornton.com.au/insights/client-alerts/preparing-for-changes-to-australian-foreign-resident-withholding-tax-on-capital-gains-rules/?utm_source=openai))
## Who’s Affected?
- **Foreign resident vendors** selling property in Australia are directly impacted: the buyer must withhold 15% of the sale proceeds at settlement unless the vendor provides an ATO clearance certificate or a variation notice.([grantthornton.com.au](https://www.grantthornton.com.au/insights/client-alerts/preparing-for-changes-to-australian-foreign-resident-withholding-tax-on-capital-gains-rules/?utm_source=openai))
- **Buyers** are obliged to withhold and remit the tax unless those documents are provided. Failure to comply leads to legal liability.([grantthornton.com.au](https://www.grantthornton.com.au/insights/client-alerts/preparing-for-changes-to-australian-foreign-resident-withholding-tax-on-capital-gains-rules/?utm_source=openai))
## Practical Implications & What You Should Do
Here are steps for both sellers and buyers to follow to stay compliant:
### For Foreign Sellers
1. Apply early for **ATA clearance certificates** to prove resident status or secure variation notices if applicable. Waiting until settlement risks non-compliance.
2. Review the share value: all TAP properties of any size are now captured—threshold is gone.([grantthornton.com.au](https://www.grantthornton.com.au/insights/client-alerts/preparing-for-changes-to-australian-foreign-resident-withholding-tax-on-capital-gains-rules/?utm_source=openai))
3. Consult a tax professional to understand capital gains obligations and how withholding may interact with your personal tax liabilities.
### For Buyers or Conveyancers
- Confirm whether the vendor has cleared their residence status or applicable variation before settlement. If not, you’ll be legally required to withhold 15% and remit to the ATO.([grantthornton.com.au](https://www.grantthornton.com.au/insights/client-alerts/preparing-for-changes-to-australian-foreign-resident-withholding-tax-on-capital-gains-rules/?utm_source=openai))
- Build this due diligence into your contract process and avoid any unexpected costs at settlement.
## Case Example: Holiday Home Sale
Imagine a foreign resident vendor decides to sell a small beach house valued at **AUD $500,000**. Under the old system this would fall under the de minimis threshold, so no withholding would apply. With the threshold removed, the buyer must now withhold **15%**, i.e. **AUD $75,000**, unless the vendor holds a clearance certificate or variation notice. Without paperwork, the vendor’s cash proceeds at settlement drop significantly.
## Takeaways
- These changes bring **every foreign vendor** selling Australian real property into the FRCGW regime.
- Proactive document management—clearing certificates or variations—is essential to avoid withholding surprises.
- Get professional tax advice especially if you expect to claim exemptions or offsets.
Understanding these changes now helps avoid serious tax and cashflow issues at settlement.