Financial planning for moving overseas: What you need to prepare

Relocating overseas can open the door to exciting new opportunities personally, professionally and, of course, financially. But before you book your one-way ticket, it’s important to think beyond the logistics and start planning your financial future.

Moving abroad can have complex tax implications and long-term effects on your wealth if you’re not properly prepared. From property decisions to retirement planning, here are some of the key financial questions to ask before you leave Australia.

1. Will you trigger a capital gains tax event?

When you become a non-resident of Australia for tax purposes, you may be subject to a ‘deemed disposal’ of your assets. This means that most assets, excluding Australian real property, are treated as though you’ve sold them at market value on the day you leave, potentially triggering capital gains tax (CGT).

Whether you should accept this deemed disposal or defer the event will depend on your asset mix and personal goals. There’s no one-size-fits-all answer, so it’s essential to speak with a tax adviser or financial planner before making a decision. Choosing the right approach could help you avoid unnecessary tax consequences.

2. What should you do with your property?

If you own property in Australia, one of the most important decisions you’ll need to make is whether to sell or retain it before you move. The tax implications are different depending on how the property is used and how long you plan to live overseas.

If it’s your principal place of residence (PPR)

As an Australian tax resident, you can usually sell your PPR without CGT implications.

However, if you sell the property after you move overseas and while you are a non-resident, this exemption no longer applies – even for the period the home was your main residence.

The six-year rule may allow you to continue treating the property as your PPR for tax purposes for up to six years after moving out (without needing to move back in), provided you don’t claim another property as PPR during that time.

So, if you’re planning to return to Australia within six years, keeping the property may be beneficial. But if you think you’ll be away longer, selling it before you move overseas and while still a resident may be more tax effective.

If you sell while living overseas

You won’t qualify for the PPR CGT exemption. You may be eligible for a partial 50% CGT discount for the period you were an Australian resident. It’s important to confirm this with your accountant.

If it’s an investment property

Once you’re a non-resident, you’ll lose access to the 50% CGT discount for the time spent overseas. This rule still applies even if you wait to sell the property after returning to Australia. Any capital gains on the investment while you’re a non-resident will also be taxed at non-resident rates.

This makes it crucial to consider your long-term plans and tax position when deciding whether to sell or hold.

3. Where should you grow your wealth?

It often makes sense to grow your wealth in the country you intend to reside long-term.  That’s because currency exchange risk can significantly impact the value of savings and investments you will ultimately have available to spend on your financial goals.

For those intending to return to Australia,  rather than relying on one-off transfers, bringing money back to Australia regularly can help smooth out fluctuations,  similar to a dollar-cost averaging strategy in investing. This can offer more consistency and control, especially if you plan to return to Australia or maintain some financial ties.

4. Should you keep contributing to superannuation?

Superannuation is one of the most tax-effective ways to save for retirement in Australia. But once you move overseas, your Australian employer will no longer be required to contribute to your super. Depending on where you live, you may also face tax complications on contributing yourself.

For example, while you’re a tax resident of the United States, making personal contributions to your Australian super can lead to additional taxes and more complicated US tax filing. If you’re in a country that allows it without causing extra tax headaches, you’ll still need to consider whether contributing fits within your broader financial goals.

Ask yourself:

• Do you have enough surplus cash to support your current lifestyle and contribute to your future? If not, which goals take priority?
• If super isn’t an option right now, what other strategies can help build your retirement savings while you’re overseas?

This kind of long-term thinking is key to maintaining momentum in your financial journey, even during a time of big change.

If cash flow is tight while you’re adjusting to life overseas, these tips for better cash flow management may help you find more room to prioritise what matters most.

5. Plan ahead to make the most of your expat experience

Many people move overseas for career growth or higher earning potential. This can be an incredible opportunity to accelerate your financial goals – if you have a plan in place.

Think about how to make the most of any income uplift or financial gains. That might include:

• paying down debt
• building an investment portfolio
• saving for a home (in Australia or overseas)
• setting up passive income streams
• continuing to plan for retirement.

It’s also important to maintain good financial habits – budgeting, setting aside an emergency fund and reviewing your insurance cover – to ensure you’re protected while you’re away.

6. Don’t do it alone

Living overseas is a chance to explore new places, meet new people and grow in ways you never imagined. But to truly enjoy the experience, you want peace of mind that your financial future is secure.

That’s where expert advice can make all the difference. Speaking with a financial adviser and tax accountant who understands expat life can help you navigate the rules, avoid pitfalls and make informed decisions about your future.

At Apt Wealth Partners, we work with Australians living here and abroad to manage their finances and protect their long-term wealth. If you’re planning a move or already living overseas, we’d love to help you feel confident about the road ahead. Get in touch to speak with an Apt Wealth Partners adviser.

General Advice warning

The information provided in this blog does not constitute financial product advice. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) and Apt Wealth Home Loans (powered by Smartline ACL 385325) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.