The CGT Six-Year Rule

Your main residence is generally exempt from capital gains tax. Move out and rent it, and normally it stops being your main residence from that day.

The six-year rule is the exception. You can choose to keep treating a former home as your main residence after you move out, and if it is producing income, that choice lasts up to six years.

The ATO's own wording for what happens past that point: if you use your former home to produce income for more than six years in one absence, it is subject to CGT for the period after the six-year limit.

Read that carefully, because two words in it do most of the work. "One absence" is what the six years attaches to. And "the period after" is what you are taxed on, not the whole gain.

This is the half people miss, and it changes the decision.

The six years applies to a former home that is producing income. If you move out and leave the property empty, or use it yourself as a holiday house, the main residence choice can continue indefinitely.

So the clock is started by the tenant, not by the move. Someone posted overseas who leaves their house empty is in a different position from someone who lets it, and the difference is not six years, it is unlimited against six.

Leaving a house empty has its own costs, and they are real: no rent, insurance that may need a vacancy endorsement, and a property nobody is checking. This page is not suggesting it as a strategy. It is pointing out that the two situations are governed differently.

Moving back in and re-establishing the property as your main residence starts a fresh absence, and a fresh six years applies to the next one.

Now the part worth being careful about. Google's own AI answer for this question currently cites a Reddit thread and repeats a suggestion that moving back in for about six months restarts the rule.

The ATO does not publish a minimum re-occupancy period. There is no six-month rule, no three-month rule, and no number to satisfy. What the law asks is whether the property genuinely became your main residence again, which is a question about facts rather than a duration you can tick off.

We are flagging this rather than repeating it because a made-up threshold is exactly the kind of thing that reads as helpful and is worth nothing if the ATO disagrees with your facts. If you are planning around a re-occupancy, that is a conversation for a registered tax agent before you move, not after you sell.

Choosing to treat a former home as your main residence has a price, and it is not money.

For the period you make that choice, you cannot treat any other property as your main residence. So if you moved out of one house, rented it, and bought another to live in, the exemption cannot cover both.

That makes it a choice rather than an automatic benefit, and the right answer depends on which property is likely to grow more, over what period, and what each one's cost base looks like.

There is a limited exception when you are moving between homes, which allows an overlap for a short window. Whether it applies to your dates is a question for your accountant.

You do not have to decide on the day you move out. The choice is generally made in the tax return for the year the CGT event happens, which is usually the year you sell.

If the property was your home first and you then use it to produce income, the cost base is generally reset to the property's market value at the time it was first used to produce income.

That is often a much higher number than what you paid, and it is in your favour: the growth from purchase to that date sits outside the calculation.

It also means one thing needs doing at the time and cannot be reconstructed later. Get a market appraisal or valuation dated to the day the property was first rented, and keep it permanently.

We are asked for these regularly, and the awkward conversations are always the same shape: someone letting a former home for the first time who finds out years afterwards that the number they needed was the one nobody wrote down.

On FAA's own managed properties, a general tenancy agreement is typically written for six or twelve months and then continues periodically. So a six-year absence is not one tenancy, it is a series of them.

The practical consequence is that nothing in the tenancy paperwork will ever tell you the six years is running out. Leases roll over, agents change, and the date that matters is the one you moved out, which appears on no rental document at all.

If you are letting a former home, put the six-year date somewhere you will see it, and put a reminder a year before. That is the point at which selling, moving back in, or accepting a partial exemption are all still open.

We can tell you what a property is letting for and what it costs to hold. We cannot tell you which of those three to choose, and we would be the wrong people to ask.

You do not lose the exemption entirely. You lose it for the period after the six-year limit.

The gain is apportioned, so the years covered by the choice stay exempt and the years past it do not. That is a materially different outcome from the all-or-nothing version people often assume.

The fifty percent discount for holding an asset more than twelve months applies to the taxable part in the normal way, for an individual.

That 50% discount is itself changing. For gains accruing from 1 July 2027 the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 replaces it, for individuals, trusts and partnerships, with cost base indexation and a minimum 30% tax rate on real gains. It is not retrospective, so a gain accruing across that date is worked out in two parts.

None of this removes the need for a calculation, and the calculation depends on your dates, your valuation and your other property. This page describes the rule; it does not compute anyone's position.