Capital Gains Tax Main Residence Exemption: What happens when a foreign resident dies?

Updated: Feb 3

From 1 July 2020 foreign residents are no longer eligible for the main residence exemption.

There are, however, some exceptions to this rule. One of these exceptions occurs when a foreign resident dies within 6 years of becoming a foreign resident.


Note that after a foreign resident has been a foreign resident for 6 consecutive years, they become an “excluded foreign resident”. This means that there are no circumstances under which they can access or pass on the main residence exemption that they accrued while living in their main residence.


What happens when a foreign resident (who is not an excluded foreign resident) dies?


If a foreign resident has only been a foreign resident for less than 6 years at the time of their death, then their beneficiary inherits their share of the main residence exemption on their former Australian residence. That is, unless the beneficiary is themselves an excluded foreign resident.


See the below table to understand under what circumstances the beneficiary may inherit the main residence exemption on the death of a foreign resident owner of a former Australian main residence: