The six-year rule is one of the most valuable and most misunderstood concessions in Australian property tax. [cite: 419]
What the Six-Year Rule Is
If you move out of your principal place of residence and rent it out, you can continue to treat it as your main residence for CGT purposes for up to six years — provided you don’t nominate another property. [cite: 423] If you sell within this six-year window, you may pay no CGT at all. [cite: 424]
A Real-World Example
You buy a home in Pakenham in 2018 for $480,000. [cite: 426] You move and rent it in 2022. [cite: 427] If you sell in 2026 for $700,000, the entire $220,000 gain is CGT-free because you are within the window. [cite: 427, 428] Waiting beyond six years would make a portion taxable. [cite: 429]
Critical Conditions
- You can only have one main residence at a time for CGT. [cite: 431]
- Buying another home and treating it as a main residence resets the clock. [cite: 432]
- Applies to individuals, not companies or trusts. [cite: 433]
Important Note: Always get advice from a registered tax agent before relying on this concession. [cite: 435]
References: 1. Mortgage and Finance Advisory. [cite: 440] 2. Clear Tax. [cite: 441] 3. Australian Taxation Office. [cite: 442]