6-Year Absence Rule
Allows you to treat a former home as your main residence for CGT purposes for up to 6 years after moving out, even if rented.
The 6-year absence rule (section 118-145 of the ITAA 1997) allows you to continue treating a property as your principal place of residence (PPOR) for up to 6 years after you stop living in it. During this absence period, any capital gain on the property remains CGT-exempt, even if the property is rented out. If you rent it out, you can also claim rental deductions — giving you the best of both worlds.
The 6-year period restarts each time you move back into the property and re-establish it as your main residence (even briefly). For example, if you move out and rent the property for 5 years, move back in for 12 months, then move out again, a new 6-year period begins from the second departure. However, you cannot treat another property as your main residence during the absence period — you can only have one PPOR at a time.
If you exceed the 6-year period without moving back in, only the portion of the gain relating to the period beyond 6 years is subject to CGT (calculated on a time-apportioned basis). This rule is particularly valuable for Defence Force members, expats, and others who move frequently. It's one of the most commonly used CGT concessions for property owners in Australia.