Work out whether your former home is still exempt from capital gains tax under the 6-year rule, and the taxable gain if you rented it out for longer.
Key facts
- Your home is generally exempt from capital gains tax. When you move out, you can keep treating it as your main residence for up to 6 years while you rent it out (the '6-year rule').
- If you don't use it to produce income (left vacant or as a holiday home), you can keep treating it as your main residence indefinitely.
- The 6-year limit applies to each separate absence: move back in and the clock resets for the next one.
- You can't treat another property as your main residence for the same period, except for up to 6 months when moving house.
- Over 6 years, CGT applies to the part of the gain after the limit, using the market value when you first rented it as the cost base.
How it's worked out (over 6 years)
- Cost base: the market value when you first rented the home, plus selling and other costs since.
- Capital gain = sale price − cost base.
- Assessable share = days after the 6-year limit ÷ days from first renting it to the sale, both counted inclusively.
- Take off the 50% CGT discount if you've owned it for at least 12 months, then add it to your income.
ATO example: Roya
| Step | Amount |
|---|---|
| Capital gain: $555,000 − ($220,000 + $15,000) | $320,000 |
| Days over 6 years (30 September 2005 to 29 September 2024) | 6,940 |
| Days since first rented (29 September 1999 to 29 September 2024) | 9,133 |
| Assessable gain | $243,162 |
| After the 50% discount | $121,581 |
Not included: partial use for business before you moved out, more than one absence, and moving-house overlaps. The ATO bases the CGT event on the contract date.
Common questions
What is the 6-year rule?
A CGT rule that lets you treat your former home as your main residence for up to 6 years after you move out, even while it's rented, so a sale in that time can be fully exempt from capital gains tax.
Can I use the 6-year rule more than once?
Yes. The 6-year limit applies to each period of absence. If you move back in and then out again, a new 6-year period starts.
What happens after 6 years?
CGT applies to the share of the gain after the 6-year limit. The cost base is the market value when you first rented the home, and the gain is apportioned by days. In the ATO's example, a $555,000 sale of an apartment worth $220,000 when first rented, with $15,000 of costs, gives an assessable gain of $243,162 and $121,581 after the 50% discount.
Can I live in another home I own and use the 6-year rule?
Not for the same period. Only one property can be your main residence at a time (apart from up to 6 months when moving), so you choose which one.
Do foreign residents get the 6-year rule?
Generally not: if you're a foreign resident when you sell, you usually can't claim the main residence exemption.
See also the capital gains tax calculator, the negative gearing calculator and inheritance tax in Australia.
Source: ATO, treating former home as main residence. Checked 22 October 2026. General information, not tax advice.