Insights · Property and lending

Selling property? Get a clearance certificate or lose 15% at settlement

By Barclay Judge, Chartered Accountant, SMSF Specialist · Updated October 2026

If you sell property in Australia, the buyer may be required to hold back 15% of the purchase price and pay it to the ATO, unless you give them a clearance certificate before settlement. Since 1 January 2025, this applies to sales of any value, so almost every Australian resident selling property now needs one.

Why the rule exists

The foreign resident capital gains withholding (FRCGW) rules make sure foreign residents pay Australian tax on gains from Australian property. The way it works is that the buyer withholds 15% unless the seller proves they’re not a foreign resident. That proof is the clearance certificate.

What changed in 2025

For contracts entered into on or after 1 January 2025:

• the withholding rate increased from 12.5% to 15%, and
• the previous $750,000 threshold was removed, so it applies to properties of any price.

Before then, most ordinary home sales fell under the threshold and didn’t need a certificate. Now, nearly all do.

What it applies to

• Houses, units, land, commercial property and other taxable Australian real property
• Leases over land, and options or rights to acquire them
• Shares in companies whose value is mainly Australian real property

If you’re an Australian resident

Apply to the ATO for a clearance certificate and give it to the buyer (usually through your conveyancer) before settlement.

• Apply online through the ATO. It’s free.
• Many applications are processed within a few days, but some take longer.
• A certificate is valid for 12 months, and can be used for any sale in that period.
• Joint owners each need their own certificate.

If you don’t provide one in time, the buyer must withhold 15% at settlement. On a $900,000 sale, that’s $135,000 you won’t receive until you lodge your tax return and claim it back.

If you’re a foreign resident

The buyer will withhold 15% at settlement and pay it to the ATO. You must then lodge an Australian tax return for the year of the sale; the amount withheld is credited against the tax on your gain, and any excess is refunded.

You may be able to apply for a variation to reduce the withholding, for example if there’s no capital gain or you have losses to offset.

Foreign residents also generally can’t claim the main residence exemption, even for years the property was their home. See the main residence exemption.

Checklist for sellers

1. Apply for a clearance certificate as soon as you decide to sell, before you list.
2. Give a copy to your conveyancer or solicitor.
3. Make sure it’s valid on the settlement date.
4. Work out any capital gains tax on the sale and put money aside. See capital gains tax for property investors.

For buyers

If the seller doesn’t give you a clearance certificate or variation before settlement, you must withhold 15% and pay it to the ATO, or face penalties. Your conveyancer will usually handle this.

We can apply for your clearance certificate as part of helping you with the sale, and work out the tax before you sign. See personal tax returns.