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.

Both panels below model the same home: bought 1 June 2015 for $500,000, lived in until 1 June 2020, rented from then until it sold on 15 September 2025 for $750,000 — an absence of just under six years. Make the absence choice and the whole absence sits inside the 6-year limit, so the home stays exempt for the entire ownership period and the gain is disregarded. Decline it and the exemption is only partial, which triggers a second rule most people miss: because the home was your main residence before it first earned income, you are taken to have acquired it at its market value on the day the rent started ($620,000 in this example), and the gain is worked out from that value over the period since. Edit either panel to model your own figures.

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

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01 —INPUTS
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Scenario B saves $13,150.00 in tax compared to Scenario A.This difference is mainly driven by the CGT discount and your marginal tax rate.
02 —RESULTS

Scenario A

Without 6-year rule

Main Residence Details

Usually the first day it was rented or available for rent.
Select only if the home was fully exempt immediately before its first income-producing use after 20 August 1996.
Use a supportable historical market valuation. Only costs incurred from this date onward belong in the cost fields below.
Treats up to 6 years of rental as main residence
Determines the financial year and 12-month discount test.
Buying/selling costs, stamp duty, legal fees, agent fees
Renovations, extensions, structural improvements
Amounts that must reduce the cost base, such as Div 43 capital works deductions claimed or claimable, or a return of capital
Allowable current-year and carried-forward losses, excluding collectable and personal-use losses
Your taxable income excluding this capital gain

2025-26 Capital Gains Tax rates

Held 63 months — 50% CGT discount applies
Capital Gain
Your capital gain is $80,000.00
PPOR Exemption
0.0% of the capital gain is exempt.
100.0% ($80,000.00) is taxable.
CGT Discount
50% CGT discount applied: $40,000.00
Additional Tax
This property sale increases your tax by approximately $13,150.00

Tax Comparison

MetricBefore SaleAfter Sale
Taxable income$100,000.00$140,000.00
Income tax$20,788.00$33,138.00
Medicare levy$2,000.00$2,800.00
Total tax$22,788.00$35,938.00

Scenario B

With 6-year rule

Main Residence Details

Usually the first day it was rented or available for rent.
Select only if the home was fully exempt immediately before its first income-producing use after 20 August 1996.
Treats up to 6 years of rental as main residence
Use the sale date if it remained rented or available for rent until disposal.
Determines the financial year and 12-month discount test.
Buying/selling costs, stamp duty, legal fees, agent fees
Renovations, extensions, structural improvements
Amounts that must reduce the cost base, such as Div 43 capital works deductions claimed or claimable, or a return of capital
Allowable current-year and carried-forward losses, excluding collectable and personal-use losses
Your taxable income excluding this capital gain

2025-26 Capital Gains Tax rates

Held 123 months — 50% CGT discount applies
Capital Gain
Your capital gain is $200,000.00
PPOR Exemption
100.0% of the capital gain is exempt.
0.0% ($0.00) is taxable.
CGT Discount
No CGT discount applies
Additional Tax
No additional tax — available capital losses absorb the taxable gain.

Tax Comparison

MetricBefore SaleAfter Sale
Taxable income$100,000.00$100,000.00
Income tax$20,788.00$20,788.00
Medicare levy$2,000.00$2,000.00
Total tax$22,788.00$22,788.00
03 —BREAKDOWN

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.

Edit inputs ↑

How to use this comparison

  1. Review the pre-filled scenarios — we've set up realistic defaults for comparison
  2. Adjust the numbers — enter your actual purchase price, sale price, and dates
  3. Compare the results — see the tax difference highlighted at the top
  4. 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 before 1 July 2027, halving your taxable gain; CPI cost base indexation and a 30% minimum tax apply to gains from that date
  • 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.

Frequently asked questions

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.
If I don't use the 6-year rule, is the gain just split by days?
Usually not from the original purchase price. Where the home was your main residence before it was first rented out, and that first rental was after 20 August 1996, you are taken to have acquired it at its market value on the day it first produced income. The gain is then worked out from that value over the ownership period measured from that same day — so the years you actually lived there drop out of the calculation instead of forming an exempt fraction of it. A straight exempt-days-to-total-days split applies where that market-value rule does not, such as a property that produced income before you ever moved in.
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 non-exempt days to total days — with the cost base and the ownership period both starting from the market value on the day the home was first rented out.
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. Because the market-value rule can apply if you don't use it, it is worth getting a valuation at the date you first rent the property out.
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.

Other CGT scenarios

Sell now vs hold See how waiting could reduce your CGT This year vs next year Compare selling before or after 30 June Before vs after 12 months See the 50% CGT discount impact PPOR vs investment Main residence exemption comparison
View all CGT scenarios

What to do after this comparison

Understand the rules

12-month discount rules Check discount eligibility and common timing errors. Using capital losses Understand loss ordering and offset constraints.

Compare alternatives

Sell this year vs next Compare CGT outcomes across financial years. Loss offsets comparison Model when carrying losses creates better outcomes.

Run the numbers

CGT calculator Run your exact numbers with dates and cost base items. Income tax calculator Measure total annual tax once gains are added.

Tax Accuracy & Sources

Reviewed: March 2026 · Tax year: 2026-27

This calculator is an estimate tool and may not cover all personal circumstances. For state-based taxes, confirm details with your state or territory revenue office.

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