The 6-Year Main Residence Rule (and When It Resets)

General information only. This is not tax or financial advice. Consult a registered tax agent for advice specific to your situation.

If you move out of your home and rent it out, you may be able to keep the main residence CGT exemption for a period under the “absence” rule. This is commonly called the 6-year rule, but the details matter.

The core rule in plain English

If a dwelling was your main residence and it stops being your main residence, you can choose to keep treating it as your main residence. The choice is limited to:

• Up to 6 years if you use the property to produce assessable income (for example, rent it out).
• Indefinitely if you do not use it to produce assessable income.

This rule sits in ITAA 1997 s 118-145 and is reflected in ATO guidance.

The 6-year clock can reset

Each time the property again becomes your main residence and later stops being your main residence, a new 6-year period becomes available.

You generally can’t claim another main residence at the same time

If you choose to keep treating the former home as your main residence under the absence rule, you cannot treat another property as your main residence during that period, except for the limited 6-month overlap rule when changing homes.

Practical example

• You live in a home for several years.
• You move out and rent it for 4 years.
• You move back in for a year, then move out and rent it again for 3 years.

Because you moved back in, the 6-year clock resets for the new absence period.

Key takeaways

• The absence rule is a choice you make for the CGT event year (usually when you lodge the return for the year you sell).
• Renting the home limits the absence period to 6 years per absence.
• Moving back in can reset the 6-year period for a later absence.
• You can’t generally claim another main residence at the same time (except a short overlap when you change homes).

If you’re close to the 6-year limit or planning to buy another property, get advice before you sell.