The 6-Year Absence Rule: CGT When Renting Out Your Home
If you move out of your home and rent it out, you can still treat it as your main residence for CGT purposes for up to 6 years. This means no CGT on the gain during that period—even though it was rented.
The 6-year absence rule lets you keep the full main residence exemption when temporarily away from your home, provided you don't claim another property as your main residence during that time.
Why this matters
Life doesn't always go to plan. Work relocations, extended travel, caring for family, or simply testing a new city—many homeowners rent out their property for a period before deciding to sell. Without the 6-year rule, the rental period would create a partial CGT liability. With it, you may pay no CGT at all.
The rule can be used multiple times, but the 6-year clock resets each time you move back in as your main residence.
What most people get wrong
Thinking it's automatic. You don't need to "apply" for the 6-year rule—it's a choice you make when calculating CGT. But you do need to meet the conditions: it was genuinely your main residence before you left, and you haven't nominated another property as your main residence while away.
Exceeding 6 years. If you rent for more than 6 years without moving back, the exemption becomes partial. The gain attributable to the period after 6 years is taxable. Moving back in (even briefly) resets the 6-year clock.
Claiming two main residences. You can only have one main residence at a time. If you buy a new home while renting out the old one and claim the new one as your main residence, you lose the ability to use the 6-year rule on the old property.
Scenario A: Without 6-year rule
Scenario B: With 6-year rule
Applies to both scenarios
0 months after Scenario A
Scenario A
Without 6-year ruleMain Residence Details
2025-26 Capital Gains Tax rates
Tax Comparison
Scenario B
With 6-year ruleMain Residence Details
2025-26 Capital Gains Tax rates
Tax Comparison
This calculator provides estimates only and does not constitute financial advice. Actual amounts may vary based on individual circumstances. Consult a registered tax agent for personalised guidance.
How to use this comparison
- Review the pre-filled scenarios — we've set up realistic defaults for comparison
- Adjust the numbers — enter your actual purchase price, sale price, and dates
- Compare the results — see the tax difference highlighted at the top
- Share or bookmark — the URL updates as you change inputs
How Capital Gains Tax Works
When you sell an asset for more than you paid, the profit is a capital gain. In Australia, this gain is added to your taxable income and taxed at your marginal rate. The amount of tax you pay depends on your total income that year, how long you held the asset, and whether any exemptions apply.
Key factors affecting your CGT
- Holding period: Assets held for 12+ months qualify for the 50% CGT discount, halving your taxable gain
- Your income: Higher income means a higher marginal tax rate on your capital gains
- Asset type: Your main residence is generally CGT-free; investment properties and shares are not
- Cost base: Includes purchase price plus costs like stamp duty, legal fees, and improvements
Use the calculator above to model your specific situation. Adjust the inputs to see how different scenarios affect your tax outcome.
FAQ
What is the 6-year absence rule?
The 6-year absence rule allows you to treat a property as your main residence for CGT purposes for up to 6 years while it's rented out, provided it was genuinely your main residence before you moved out and you don't claim another property as your main residence during that time.
Can I use the 6-year rule more than once?
Yes. Each time you move back into the property as your main residence, the 6-year clock resets. So you could rent it out for 5 years, move back for a year, then rent it out again for another 6 years.
What if I rent my home out for more than 6 years?
You get a partial exemption. The first 6 years of rental are covered by the rule, but the gain attributable to the period after 6 years is taxable. The calculation is time-based, using the ratio of exempt to non-exempt days.
Do I need to tell the ATO I'm using the 6-year rule?
Not in advance. You apply the rule when calculating CGT at the time of sale. However, you should keep records showing when you lived there, when you moved out, and that you didn't claim another main residence during the absence.
Can I claim the 6-year rule and also claim another property as my main residence?
No. You can only have one main residence for CGT purposes at any time. If you buy a new home and treat it as your main residence, you cannot also use the 6-year rule on the old property for the overlapping period.
What if I only partly rent out my home (e.g., one room)?
The 6-year rule applies to the whole property, not parts. If you're living in the property and renting out a room, different rules apply—the main residence exemption is apportioned based on floor area or similar.
Disclaimer
This tool provides estimates only and does not constitute financial advice. Investment decisions should not be based solely on tax considerations. Market conditions, investment goals, and personal circumstances all play a role.
Before making decisions about selling assets, consult a registered tax agent or licensed financial adviser.