Property vs Shares for Expats: Which Is Smarter on Tax?

For decades, the great Australian wealth-building instinct has been simple: buy property. Bricks and mortar, the family home, an investment unit or two. Shares were for people in suits. But if you’re an Australian living overseas, the tax scales have tilted in a way that’s worth understanding before you sink your savings into either.

This isn’t a “shares good, property bad” sermon. Both can build wealth, and the right choice depends on your goals, your risk appetite and your whole financial picture, which is a conversation for a licensed financial adviser, not a blog. But purely on the tax side, and specifically for non-residents, the two are treated very differently, and the gap has widened. Let’s lay it out honestly.

The property side: a pile of headwinds for non-residents

Property can still be a fine investment. But as a non-resident, you now cop a series of tax hits that residents and the property brochures conveniently gloss over.

First, the main residence exemption is gone for foreign residents. Sell your former Australian home while you’re a non-resident and you generally lose the exemption entirely, with the gain potentially taxable right back to the day you bought it. Second, when you sell, the buyer must withhold 15% of the sale price under the foreign resident capital gains withholding rules. Third, as a foreign person you may have paid a stamp duty surcharge of 7% to 9% when you bought, plus an annual land tax surcharge every year you hold in several states. And fourth, the 2026-27 Federal Budget restricted negative gearing to new builds from 1 July 2027 and is scrapping the 50% CGT discount, both of which chip away at property’s old tax appeal.

We’ve covered each of these in detail: the loss of the main residence exemption, the foreign purchaser surcharges, and the 2026 Budget changes to negative gearing and CGT. None of this makes property a dud. It just means the full cost of being a foreign property owner is a lot heavier than the upside-only pitch suggests.

The shares side: a couple of genuine tax advantages for non-residents

Here’s where it gets interesting, because for a non-resident, an Australian share portfolio enjoys two tax features that property simply can’t match.

The first is the big one. Shares in Australian companies are generally not “taxable Australian property,” and non-residents only pay Australian capital gains tax on taxable Australian property. So if you buy ordinary listed Australian shares while you’re a non-resident and sell them while still a non-resident, the capital gain generally sits outside the Australian CGT net altogether. Compare that to property, where the gain is squarely taxable and 15% is withheld at settlement. That’s a genuine, structural difference.

The second is franked dividends. When an Australian company pays a fully franked dividend, it’s paying you out of profits it has already paid 30% company tax on. For a non-resident, a fully franked dividend has no further Australian tax and no withholding tax taken out; it’s effectively treated as already taxed, and it doesn’t even go in an Australian return. Unfranked dividends are different (they cop withholding tax, typically 15% under a treaty, or 30% if you are a resident of a country that does not have a tax treaty with Australia), but the franked portion is about as clean as Australian investment income gets for an expat.

The practical advantages too (not just tax)

Beyond tax, shares have some plain practical edges for someone living overseas. You can start small and invest in increments, rather than needing a deposit and a mortgage. Transaction costs are tiny next to property’s stamp duty, legal fees, conveyancing and agent commissions. They’re liquid, you can sell in days, not months, which matters when you’re managing money from another time zone. And there’s no leaking roof to fix from 10,000 kilometres away, no tenant to chase, no landlord insurance. For a hands-off expat, that simplicity is worth something.

The flip side, in fairness: property lets you use leverage (borrowing to amplify your investment) far more readily than shares, and some people genuinely value the tangibility of bricks and mortar. Shares are also more volatile day to day, which tests the nerves. Neither is “better” in the abstract.

The trap that catches expats with shares: the deemed disposal

Now for the catch, because there’s always a catch, and this one is easy to miss.

The tax-free CGT treatment applies to shares you acquire while you’re a non-resident. But the shares you already owned when you left Australia are treated differently. The day you stop being an Australian tax resident, the ATO deems you to have sold your non-property assets (including those shares) at market value, which can trigger a capital gains bill on departure. You can elect to defer that instead, keeping the shares in the Australian tax net until you actually sell, but it’s a deliberate choice with long-term consequences, and most people don’t realise they’re making it.

So the “shares are CGT-free for non-residents” advantage really applies cleanly to shares bought after you’ve left. For your existing holdings, you’ve got a decision to make in the year you depart, and it’s worth proper advice. Your host country’s tax rules matter here too, since a gain that’s tax-free in Australia might be fully taxable where you live.

So, property or shares?

On the tax side alone, and purely for a non-resident, shares carry some clear structural advantages: no Australian CGT on gains for shares acquired while non-resident, and clean treatment of franked dividends, versus property’s lost main residence exemption, 15% withholding, surcharges and tightened negative gearing. That’s not nothing.

But tax is only one input. Property offers leverage and tangibility; shares offer liquidity, low costs and diversification. The genuinely smart move for most people isn’t “all in on one,” it’s building a sensible, diversified position that suits your circumstances, then making sure the tax treatment is optimised around it. The tax tail shouldn’t wag the investment dog, but it would be daft to ignore a structural advantage worth real money.

Tread your own path. Just make sure you understand the tax treatment of each step before you take it.

Weighing up property versus shares as an expat? Get the tax picture clear.

The tax differences between property and shares for a non-resident are significant and easy to get wrong, especially the deemed disposal when you leave, the franked dividend treatment, and the pile of property-specific costs foreign owners face. Understanding them properly can be the difference between keeping your investment gains and handing a chunk to the ATO.

Our specialist expatriate tax team can walk you through the tax treatment of both, and how they fit your situation as an Australian living overseas, working remotely with clients all over the world.

Book an appointment with our expat tax specialists today and get the tax side sorted before you invest. Your future self, and your hip pocket, will thank you.

General information only. This article doesn’t consider your personal circumstances and isn’t tax, financial or investment advice. Both property and shares carry risk, including the risk of loss, and tax rules change frequently. The tax treatment of shares can also depend on the rules of your country of residence. Speak to our specialist expatriate tax team today, or with another registered tax agent and a licensed financial adviser, before acting.

References

1. Australian Taxation Office, “Foreign residents and capital gains tax” (foreign residents are subject to CGT only on taxable Australian property; shares in Australian companies are generally not taxable Australian property): ato.gov.au
2. Income Tax Assessment Act 1997 (Cth), sections 855-10 and 855-15 (a foreign resident disregards a capital gain unless the CGT asset is taxable Australian property, and the categories of taxable Australian property): austlii.edu.au
3. Australian Taxation Office, “Changing residency” (CGT event I1, the deemed disposal of non-taxable-Australian-property assets when you stop being an Australian resident, and the election to defer): ato.gov.au
4. Australian Taxation Office, “Dividends paid or credited to non-resident shareholders” (franked dividends to non-residents are not subject to withholding tax; unfranked dividends are): ato.gov.au
5. Australian Taxation Office, “Main residence exemption for foreign residents” (loss of the exemption when selling as a foreign resident): ato.gov.au