ATO’s New Property Rule Could Cost Sellers Over $122,000 – Here’s How to Avoid It

Key takeaways

A little-known change by the Australian Taxation Office (ATO) has put property sellers at risk of having 15% of their sale price withheld, a mistake that could cost over $122,000 for the average property owner.

Since January 1, 2025, anyone selling property in Australia must obtain a clearance certificate before settlement.

If they fail to do so, the buyer is legally required to withhold 15% of the sale price and send it to the ATO.

A little-known change by the Australian Taxation Office (ATO) has put property sellers at risk of having 15% of their sale price withheld, a mistake that could cost over $122,000 for the average property owner.

Since January 1, 2025, anyone selling property in Australia must obtain a clearance certificate before settlement.

If they fail to do so, the buyer is legally required to withhold 15% of the sale price and send it to the ATO.

Sellers will then need to wait until their next tax return to reclaim the money, which could cause serious financial strain, especially for those relying on sale proceeds for their next purchase.

This rule applies to all property sales, as the previous $750,000 threshold has been scrapped.

The withholding rate has also been increased from 12.5% to 15%, making it even more important for sellers to be prepared.

With the median Australian property price sitting at $815,912, failing to obtain a clearance certificate could result in $122,386 being withheld, a costly mistake for sellers who need immediate access to their funds.

What is a clearance certificate, and how do you get one?

A clearance certificate is an official document from the ATO that confirms the seller is an Australian resident for tax purposes and therefore not subject to foreign resident capital gains withholding.

The good news?

It’s free to obtain.

The ATO recommends applying as soon as you start thinking about selling.

Most clearance certificates are issued within a few days, but some can take up to 28 days.

The certificate is valid for 12 months, meaning sellers don’t have to wait until they sign a contract to apply.

Sellers must provide the certificate to the purchaser at or before settlement.

If they fail to do so, the buyer has no choice but to withhold 15% of the sale price and send it to the ATO.

Why this matters for sellers

These changes mean that even if your property sells for $500,000, you could have $75,000 withheld unnecessarily.

This unexpected delay could create financial headaches for sellers expecting a smooth transition into their next home or investment.

Some conveyancers are reportedly unaware of the new rule, meaning sellers must take responsibility to ensure they aren’t caught out.

The bottom line

This is an easy mistake to avoid—but a costly one to make.

Given that the clearance certificate is free, simple to apply for, and essential for every seller, it’s worth acting early to ensure a smooth settlement.

If you’re planning to sell, apply for your clearance certificate now via the ATO’s website.

Don’t let a paperwork oversight delay access to your hard-earned equity.

About Chris Dang Chris Dang is an accountant by training and has worked in the Financial Planning industry for many years. Chris brings together property, accounting, and financial planning experience to help clients of Metropole Wealth Advisory create a holistic plan for their wealth.