Principal Place of Residence (PPOR)
Your main home, which is generally exempt from capital gains tax when sold.
Your principal place of residence (PPOR), commonly called your "main residence," is the home you live in as your primary dwelling. Under the main residence exemption, capital gains on the sale of your PPOR are generally fully exempt from CGT. This is one of the most valuable tax concessions in Australia, as property values can appreciate significantly over long holding periods.
To qualify for the full exemption, the property must have been your main residence for the entire period you owned it, you must not have used it to produce income (e.g., renting out a room), and you must not have claimed it as a place of business. If you used part of the property for income-producing purposes, the exemption is apportioned accordingly. You can only have one main residence at any time, though couples may be able to nominate different properties temporarily during a transitional period.
The 6-year absence rule (also called the temporary absence rule) allows you to continue treating a property as your PPOR for up to 6 years after you move out, provided you don't treat another property as your main residence during that time. This is particularly useful for people who move overseas or interstate temporarily, or who rent out their former home after purchasing a new one.
How it works
The main residence exemption works by treating the entire capital gain on your home as tax-free, provided you can show the property was genuinely your main residence for the whole time you owned it, was never used to produce income, and was never claimed as a place of business. Because the exemption depends on how the property was actually used across the whole ownership period, not just at the point of sale, it's a factual test rather than an automatic one — a property you called home for most of the time but rented out for a stretch, or used as a base for a home-based business, only gets a partial exemption apportioned to the periods and portions where the conditions were met.
In practice, the PPOR exemption is the reason selling the family home rarely triggers a tax discussion the way selling an investment property does — most homeowners never need to think about capital gains tax on their own residence because the exemption is complete. It becomes relevant the moment your living arrangements get more complex: renting out a spare room on a platform like Airbnb, running a business from a home office, or owning two properties at once during a move, all of which can reduce the portion of an eventual gain that stays exempt.
You can only have one main residence at a time, which matters for couples moving between properties or briefly owning two homes during a purchase-before-sale transition — there are limited concessions for a short overlap period, but treating two properties as fully exempt simultaneously isn't available on an ongoing basis. The 6-year absence rule is the main relief valve for people who move out of their home without buying a replacement — it lets a former home keep its exempt status for up to six years even while rented out, which is the mechanism that lets people relocate for work or travel without immediately losing the exemption.
Example: partial exemption for a home office
You own a home with a $200,000 capital gain on sale, and for the last 3 of the 10 years you owned it, you used 10% of the floor area as a dedicated home office claimed against your income.
Roughly, the exemption is reduced for the portion of the property and period used for income purposes — in this simplified case, around 3% of the total gain (10% of the floor area × 3/10 of the ownership period) may be excluded from the exemption, leaving the vast majority of the $200,000 gain still tax-free.
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Capital Gains Tax (CGT)
Tax on the profit made from selling or disposing of an asset, such as property, shares, or cryptocurrency.
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.
Negative Gearing
When the costs of owning an investment property (interest, expenses) exceed the rental income, creating a tax-deductible loss.
Stamp Duty (Transfer Duty)
A state/territory tax on property purchases, calculated as a percentage of the property value — rates vary by jurisdiction.
Cost Base
The total cost of acquiring and holding an asset, used to calculate the capital gain or loss on disposal.