18 May 2018
Sale - Mortgagee in possession - CGT Clearance Certificate
Hi Mentor,
When the vendor is a mortgagee in possession, who has the responsibility of providing the ATO Capital Gains Withholding Clearance Certificate to the purchaser – the registered proprietor or the vendor mortgagee in possession?
Thank you in advance.
Thank you for the question.
A clearance certificate is for the registered proprietor of the property. The registered proprietor may apply for a clearance certificate and provide that to the mortgagee who in turn provides it to the purchaser. In the event the registered proprietor doesn't cooperate with the mortgagee, then the mortgagee, as a creditor, can apply for a foreign resident capital gains variation to have the withholding reduced to the extent that the amount it is owed would not be covered by the sale proceeds if an amount was withheld.
If a clearance certificate or variation is not provided the purchaser should withhold the 12.5%.
See the Situations involving mortgagors and mortgagees information on the ATO website for more information.
Regards
Mentor
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