Moving to the States on an E-3 and selling your Australian home around the same time?
There’s a simple timing difference between Australia and the US that can quietly turn a tax-free Australian sale into a taxable gain in America.
The fix is usually straightforward—but you need to plan the dates.
Two Countries, Two Clocks
- Australia – For capital gains tax (CGT), the “disposal” of property happens when you sign the contract. If it’s your main residence, the Australian rules can often wipe out the gain at that point.
- United States – For income tax, the sale generally happens when you settle/close—the day title and the benefits of ownership pass.
If you sign in March (Australia sees the disposal then) but you don’t settle until May, the US sees a May sale.
Why E-3 Arrivals Get Caught
US tax residency doesn’t depend on your visa—it’s driven by a day-count test (the “substantial presence” test).
In the year you meet that test, your US residency start date is effectively the first day you set foot in the US that year.
Here’s the rub:
- Before you arrive – You’re a non-resident for US tax.
- After you arrive (and once you meet the day-count) – You’re a US tax resident from that first day of presence forward.
So, if you arrive before settlement, the US treats the later settlement as a sale while you’re a resident—even if Australia already treated the sale at contract and applied the main residence exemption.
Australia may charge no tax, leaving you with no credit to use against the US bill.
“Won’t The Treaty Save Me?”
Often not.
The Australia–US tax treaty allows each country to tax its residents under their own rules.
Once you’re a US resident for tax, the US can tax your worldwide gains—including your Australian home—despite Australia’s main residence outcome.
In short: great treaty, unhelpful here.
The Good News: The US Home-Sale Exclusion
The US has its own main-home relief.
If you owned and lived in the home for any two years in the five years before settlement, you can generally exclude up to USD $250,000 of gain (USD $500,000 for many married couples filing jointly).
A home outside the US can qualify—there’s no requirement it be on American soil.
A couple of friendly clarifications:
- You don’t need to be living there on the day of settlement. A reasonable period after moving out is fine.
- If your gain is bigger than the exclusion, the excess is taxed at US capital gains rates.
A Simple Example
March – You sign a contract to sell your Sydney home. Australia treats the disposal now, and—because it’s your main residence—there’s no Australian CGT.
April – You fly to the US to start your E-3 job. From that first day in April (once you meet the day-count), you’re a US tax resident.
May – The sale settles. The US sees a May sale while you’re a resident. Unless the US home-sale exclusion fully covers the gain, you could have US tax to pay—with no Australian credit to offset it.
What Smart Planning Looks Like
Sequence The Dates
The cleanest solution is to settle before you set foot in the US for that year.
If that’s not possible, see if settlement can be brought forward.
Use The US Exclusion
Check whether you meet the 2-out-of-5-year ownership and use test.
Keep tidy records of when you lived there and of any renovations/improvements (they can increase your cost base for US purposes).
Play The Day-Count Carefully
If you’ll be in the US for less than half the year, there are limited rules that may let you remain a non-resident for US tax that year (if your main ties stay in Australia).
This is a facts-and-paperwork exercise—worth exploring before you travel.
Mind The Currency
Your US return is in US dollars, so exchange rates can make your US gain look bigger or smaller than it feels in AUD.
If you have an AUD mortgage, paying it off at settlement can create a separate US-tax currency gain or loss. It’s manageable—just don’t be surprised by it.
Quick Checklist Before You Fly
- Ask The Agent/Solicitor – Can we accelerate settlement?
- Map Your Days – When exactly will you land in the US? Can you delay arrival until after settlement if needed?
- Confirm Eligibility – Do you meet the US home-sale exclusion? Gather proof of ownership, occupancy, and improvements.
- Model The Numbers – Estimate the gain in USD and test different arrival/settlement dates.
- Paperwork Plan – If you’ll be under 183 days in the US this year and keeping your life in Australia, ask whether an exception to US residency could apply.
Common Myths—Busted
- My visa type decides my tax.” No—the day-count does.
- “If Australia doesn’t tax it, the US can’t.” Not true once you’re a US tax resident.
- “I must be living there on settlement day to claim US relief.” Not required—you just need the 2-out-of-5-year history.
The Bottom Line
For many Aussies heading over on an E-3, the only real “trap” is timing. Australia taxes at contract, the US taxes at settlement.
Arrive in the US before settlement and your main residence can suddenly have a US tax bill attached.
The best defences are simple: settle before you arrive where possible, lean on the US home-sale exclusion, and plan your day-count.
Add a quick currency sense-check, and you’ll turn a potential headache into a non-event.
