blog.cgthub.au

Tag: main residence exemption

  • CGT on Inherited Property Australia 2026-27: Complete Guide

    CGT on Inherited Property Australia 2026-27: Complete Guide

    CGT on Inherited Property in Australia: The Complete 2026-27 Guide

    capital gains tax inherited property australia does not charge capital gains tax on the spot. There is no inheritance tax and no death duties here — the property simply passes to the estate and then to the beneficiaries with the tax bill deferred. The bill arrives later, when the property is sold. And that is where thousands of families get caught out: they assume “inherited” means “tax-free”, miss a deadline, use the wrong cost base, and hand the ATO tens of thousands of dollars they never needed to pay.

    Quick answer: In 2026-27, inheriting property in Australia triggers no CGT at the time of inheritance. CGT applies when you (or the estate) later sell it. If the home was the deceased’s main residence and you settle the sale within 2 years of death, the gain is usually fully exempt. Otherwise your cost base is either the market value at the date of death (pre-CGT or main-residence acquisitions) or the deceased’s original cost base — and the 50% CGT discount often applies even if you sell weeks after inheriting, because you inherit the deceased’s holding period too.

    capital gains tax inherited property australia  and CGT actually work

    Death itself is generally not a CGT event. When the owner dies, their CGT assets roll over to the legal personal representative (the executor or administrator) and then to the beneficiaries. No gain is crystallised at that point. The tax is deferred until someone — the estate or a beneficiary — disposes of the asset.

    This has three immediate consequences that shape everything else in this guide:

    • You do not pay CGT when you inherit. You pay it when you sell (or otherwise dispose of) the inherited property.
    • You inherit a cost base — and which cost base you inherit depends on when the deceased bought the property and how it was used. Getting this wrong is the single most expensive mistake in this area.
    • The executor can trigger CGT too. If the executor sells the property during administration of the estate, the gain is reported in the deceased estate’s tax return — not in the beneficiaries’ returns.

    Model any sale scenario with our free CGT calculator — it handles the discount, the tax brackets and the Medicare levy for 2026-27.

    Your inherited cost base: the ATO’s three rules

    The cost base is what the ATO subtracts from your sale price to find the capital gain. For inherited property it is not simply “what it was worth when they died” — it depends on the property’s history:

    The deceased’s situation Your cost base (first element) Your acquisition date
    Bought before 20 September 1985 (pre-CGT asset) Market value at the date of death Date of death
    Bought on/after 20 September 1985, and it was the deceased’s main residence just before death (not used to produce income), inherited after 20 August 1996 Market value at the date of death Date of death
    Bought on/after 20 September 1985 and it was not the deceased’s main residence (e.g. an investment property, or it was rented out) The deceased’s cost base at the date of death — their original purchase price plus buying costs, improvements, legal fees and stamp duty The date the deceased acquired it

    See the ATO’s cost base rules for inherited property for the full detail, including the special disability trust exception.

    Why this matters: a property bought in 1995 for $220,000 and worth $1.1 million at death hands you a $220,000 cost base (plus costs), not a $1.1 million one. The entire growth during the deceased’s lifetime is baked into your eventual gain. But a property bought in 1980 hands you a cost base of the date-of-death market value — decades of growth wiped clean. Before you assume anything, find out when the deceased bought it.

    The 2-year main residence exemption

    This is the most valuable relief in the inherited-property rules — and the most commonly fumbled. If the dwelling was the deceased’s main residence just before death and was not being used to produce income, then a sale that settles within 2 years of the date of death is fully exempt from CGT. The gain is disregarded entirely.

    Three traps inside this rule, each worth real money:

    1. Settlement, not contract, must fall inside the 2 years. Signing a contract at month 23 with settlement at month 25 fails. Probate delays, finance holdups and long settlements are how families blow this. Put the deadline in your calendar the week the grant of probate issues.

    2. The ATO can extend the 2 years — but ask before it expires. Delays outside your control — will disputes, estate administration holdups, market conditions — can justify an extension from the Commissioner, and an extra 18 months can be self-assessed under the ATO’s compliance guideline. Extensions are not automatic; get advice early if the clock is running out.

    3. The exemption only covers the dwelling plus up to 2 hectares. On acreage and rural properties, the main residence exemption is capped at 2 hectares (including the dwelling) — the rest of the land is taxable even inside the 2-year window. You can choose which 2 hectares give the best outcome.

    There is also a second path to a full exemption that does not need the 2-year deadline: if the dwelling was the deceased’s main residence at death and, from the date of death until sale, it was the main residence of a specified person — the deceased’s spouse, a beneficiary, or someone with a right to occupy it under the will — the full exemption applies even if the sale happens years later. Our 6-year rule guide explains the related absence concession in detail.

    Work through your own situation against the ATO’s inherited property exemption flowchart — it is a series of yes/no questions that lands you on “fully exempt”, “partially exempt” or “not exempt”.

    Calculating CGT on an inherited property, step by step

    The method is the same for every inherited sale:

    1. Establish the cost base. Use the table above. For a post-CGT investment property this means reconstructing the deceased’s cost base — purchase price plus stamp duty, legal fees, buyer’s agent fees, and the cost of capital improvements (renovations, extensions). Ask the executor or the deceased’s accountant; if records are missing, a quantity surveyor’s report and old bank statements can rebuild a defensible figure. Costs the executor incurs (probate legal fees, conveyancing on transfer) can also be added.

    2. Check for a full or partial exemption. Run the ATO flowchart. If the 2-year or specified-person conditions are met, stop here — no CGT.

    3. Subtract the cost base from the capital proceeds (usually the sale price, less selling costs like agent commission). Positive is a gain; negative is a capital loss you can carry forward.

    4. Apply the 50% CGT discount if eligible, then add the net gain to your taxable income. The gain is taxed at your marginal rate — it stacks on top of your salary for the year. See our 2026-27 income tax rate table for the brackets.

    Worked example 1: the family home, sold inside 2 years

    Mum bought her Sydney home in 2010 for $520,000, lived in it until her death in March 2025, and never rented it out. Her daughter inherits it and sells it; settlement occurs in January 2027 — within 2 years of death.

    The home was Mum’s main residence just before death and was not income-producing. The sale settles inside the 2-year window. CGT: $0. The $600,000+ of growth since 2010 is never taxed. Had settlement slipped to April 2027 — one month late — the exemption would have been lost and the gain calculated from Mum’s $520,000 cost base.

    Worked example 2: the investment property, real 2026-27 numbers

    Dad bought an investment unit in 2005 for $300,000, paying $15,000 in stamp duty and legal fees — cost base $315,000. He died in 2023. His son inherits and sells the unit in 2026-27 for $720,000, paying $18,000 in agent commission and legal fees (deducted from proceeds: $702,000).

    The capital gain – Capital proceeds: $702,000 – Less cost base: $315,000 – Capital gain: $387,000

    The discount – The son inherits Dad’s acquisition date (2005) as well as his cost base — the 12-month clock includes the deceased’s holding period. The 50% CGT discount applies even though the son has only held it a few years. – Taxable portion: $387,000 × 50% = $193,500

    The tax (2026-27 resident rates) The son earns a $110,000 salary. Without the sale his tax is $23,788 plus $2,200 Medicare levy. Adding the $193,500 gain pushes his taxable income to $303,500: – Tax on $303,500: $102,713 – Medicare levy (2%): $6,070 – Less tax and levy without the sale: $25,988 – Extra tax from the sale: roughly $82,795

    The lesson: the taxable event is the sale, but the gain includes all the growth from 2005 — two decades of it. That is why reconstructing the full cost base (every improvement receipt, every fee) matters so much. Run your own figures through our CGT calculator.

    Worked example 3: the pre-CGT family home

    Grandad bought his Brisbane house in 1980 for $60,000. He died in March 2026, when a licensed valuer assessed it at $950,000. Because it is a pre-CGT acquisition, the beneficiary’s cost base resets to the $950,000 market value at death — 46 years of growth wiped clean.

    The beneficiary sells in September 2027 for $1,000,000 (more than 12 months after the deemed acquisition at death, so the discount applies): – Capital gain: $1,000,000 − $950,000 = $50,000 – After 50% discount: $25,000 added to taxable income

    Compare that with Example 2: the pre-CGT reset is enormously valuable. The one thing you must get right is the date-of-death valuation — a professional valuation, not a real-estate agent’s appraisal, because the ATO can challenge it years later.

    The 50% discount trick most beneficiaries miss

    This deserves its own section because almost no competitor article explains it properly. You do not need to hold the inherited property for 12 months to get the 50% CGT discount. Where you inherit the deceased’s cost base (the investment-property row in the table), you are also taken to have acquired the asset when the deceased acquired it. A property your father bought in 2005 and you sell three weeks after probate still qualifies for the 50% discount — his 20-year holding period is yours.

    The exception: where the cost base resets to market value at death (pre-CGT assets, or a main residence inherited after 20 August 1996), your 12-month clock starts at the date of death. Sell within 12 months of death in those cases and you lose the discount — though if it was the deceased’s main residence you are probably exempt under the 2-year rule anyway.

    Our 50% CGT discount guide covers the discount mechanics, and note that 2026-27 is the last year the discount works this way — from 1 July 2027 it is replaced by CPI indexation plus a 30% minimum tax on net capital gains.

    The foreign-resident trap

    Migrant families need to read this section twice. Two separate traps:

    Trap 1: CGT can be triggered on the deceased’s final return. When CGT assets other than taxable Australian property (e.g. shares) pass to a beneficiary who is a foreign resident or tax-exempt entity, CGT event K3 can crystallise the gain just before death — and the tax is paid on the deceased’s date-of-death return, not by the beneficiary. This catches estates completely off guard.

    Trap 2: no main residence exemption for foreign residents. If you are a foreign resident when you sell an inherited Australian home — or if the deceased had been a foreign resident for more than 6 years at death — you are generally not entitled to the main residence exemption at all, including the 2-year rule. The gain is fully taxable, with no 50% discount for foreign residents either. And since 1 January 2025, a 15% foreign resident CGT withholding applies to property sales with no minimum threshold — the buyer withholds it from the purchase price and remits it to the ATO.

    Joint tenants vs tenants in common

    How the deceased held the property changes what passes through the estate:

    • Tenants in common: the deceased’s share becomes an asset of the estate. The executor can sell it or transfer it to a beneficiary — all the rules in this guide apply to that share.
    • Joint tenants: the deceased’s interest passes automatically to the surviving joint tenant(s) in equal shares by survivorship — it never enters the estate. For CGT purposes the survivor is treated as if the interest passed as a beneficiary of the estate, so the main residence exemption rules still apply to that interest.

    Common mistakes that cost beneficiaries money

    1. Assuming “inherited” means “tax-free”. Inheritance defers CGT; it does not forgive it. The most expensive sentence in this area is “we thought there was no tax on inherited property.”

    2. Using the date-of-death value as the cost base for an investment property. That reset only applies to pre-CGT assets and qualifying main residences. For a post-CGT investment property you inherit the deceased’s original cost base — using the market value instead understates the gain and invites an amended assessment.

    3. Missing the settlement deadline. Contract in month 23, settlement in month 25: exemption gone. Diary the 2-year date from the day of death, not from probate.

    4. Forgetting the 2-hectare cap. The main residence exemption covers the dwelling plus 2ha. On larger blocks, the excess land is taxable.

    5. The executor distributing before tax is sorted. An executor who pays out beneficiaries before the estate’s tax position is final can be personally liable for the estate’s unpaid tax. Sort the CGT position before final distribution.

    6. Moving into the property without thinking. Moving in can start your own main residence exemption — but it can also complicate the 2-year deceased-estate exemption and the cost base. Get advice before changing the property’s use.

    7. No date-of-death valuation. Where the cost base resets to market value at death, a licensed valuer’s report is the foundation of the whole calculation. An agent’s letter of opinion is not the same thing.

    Your first-30-days checklist

    • Commission a licensed valuation as at the date of death (you will need it for the cost base or the exemption).
    • Gather the records: the deceased’s original purchase contract, stamp duty receipt, improvement invoices, loan statements, rental records. Ask the executor and the deceased’s accountant first.
    • Diary the 2-year settlement deadline — date of death plus 2 years — and work backwards to a latest contract date.
    • Check every beneficiary’s tax residency — a foreign resident beneficiary changes the CGT outcome entirely.
    • Do not sign a sale contract until the exemption position and cost base are worked out.
    • Keep the property insured and secure — vacant-property insurance matters during administration.
    • Get the estate’s accountant involved early, before any distribution. Our full property CGT guide is a useful companion once the numbers are in.

    Frequently asked questions

    Do I pay CGT when I inherit a property in Australia? No. Inheriting is not a CGT event — the gain is rolled over and deferred. You pay CGT only when you (or the estate) later sell or dispose of the property.

    My siblings and I inherited Mum’s house together. How does CGT work? Each beneficiary has their own cost base for their share and their own CGT outcome when they dispose of it. If one sibling buys out the others, that buyout is a CGT event for each sibling selling their share. Get each share valued and each person’s position calculated separately.

    Can I claim the 50% CGT discount if I sell soon after inheriting? Usually yes. You inherit the deceased’s acquisition date along with their cost base, so a property held for decades qualifies for the discount even if you sell weeks after probate. The exception is where your cost base resets to market value at death — then your 12-month clock starts at death.

    What if the inherited property was rented out before death? Then it was being used to produce income, which knocks out the 2-year full exemption path. You may still get a partial main residence exemption depending on the periods of residence vs rental, and the cost base will be the deceased’s original cost base. This is one of the messiest scenarios — get advice.

    The estate is selling the property, not me. Who pays? The deceased estate does. The executor reports the capital gain in the estate’s tax return. Beneficiaries do not report it — but the distribution they receive may be smaller as a result.

    Is there stamp duty when the property transfers to me? Transfers of dutiable property to beneficiaries under a will are generally exempt from stamp duty in every state and territory — but the exemption has paperwork and timing requirements, so confirm with your state’s revenue office rather than assuming.

    The bottom line

    Inherited property is a timing game played with three numbers: the cost base you inherit, the 2-year settlement deadline, and the deceased’s holding period that unlocks your 50% discount. Get a licensed date-of-death valuation, reconstruct the full cost base, diary the deadline from the date of death, and check everyone’s tax residency before anything is signed. Do that, and the biggest tax bill of your family’s life might legally be zero. Skip it, and the ATO will do the arithmetic for you — at your expense.

    Run the numbers for your situation with our free CGT calculator, and if the gain will stack onto a salary, our income tax calculator shows exactly which bracket each extra dollar lands in.

  • 6-Year CGT Rule Australia 2026-27: Main Residence Exemption

    6-Year CGT Rule Australia 2026-27: Main Residence Exemption

    Move out of your home, rent it out for five years, then sell it — and pay zero capital gains tax. That’s the promise of Australia’s 6-year rule, and for once the promise is real. Under section 118-145 of the tax law, you can keep treating a former home as your main residence for CGT purposes for up to six years after you stop living in it, even while tenants are paying you rent.

    But the rule has sharp edges, and most of what goes wrong happens before the first tenant moves in. One thing to watch: from 1 July 2027 the 50% CGT discount is replaced by cost base indexation plus a 30% minimum tax on net capital gains — so anyone whose absence runs past the 6-year mark needs to know which regime their gain falls under. More below.

    How the 6-year rule actually works

    Your main residence is normally exempt from CGT. The 6-year rule lets that exemption travel with you after you move out. Five conditions decide whether you qualify:

    1. It must have genuinely been your main residence first. This is the condition that sinks most claims. You need to have actually lived there — electoral roll, driver’s licence, utility bills, mail. The ATO’s data-matching makes the timeline easy to verify.

    2. The 6-year clock only runs while it’s income-producing — and it’s cumulative. If you rent the place out, you get a maximum of six years of deemed main-residence treatment per absence. If you move out and leave it vacant — or use it only privately, like a holiday home — there is no time limit at all. The exemption can continue indefinitely. Note the six years need not be continuous: rent for two years, leave it vacant for a year, rent for four more, and you’ve used the full six — the rental stints add together. The ATO counts in days, not anniversaries, so “about six years” is not a planning method.

    3. One main residence at a time. While you’re treating the old home as your main residence, you can’t treat any other property as your main residence for the same period — with one exception: when moving between homes, both can be covered for up to six months, provided the old place was your main residence for a continuous 3 months in the year before you sold it.

    4. You make the choice at sale time, not before. There’s no form to lodge when you move out. The election happens on your tax return in the income year you sign the sale contract. That also means you can’t “reserve” the choice — it’s a decision you make with full hindsight when you sell.

    5. The CGT event date is the contract date. Sign the contract on 28 May and the gain belongs in that financial year, even if settlement happens in July. If your 6-year window closes on 30 May, a contract signed on 2 June is outside it.

    The ATO’s guide to treating a former home as your main residence confirms each of these conditions and works through its own example of multiple absence periods.

    The trap that catches everyone: you must have lived there first

    Search any property forum and you’ll find the same question, asked a dozen ways: “My place has always been an investment property — if I move into it before I retire, does the 6-year rule wipe out the CGT?” The answer is no, and misunderstanding this costs people tens of thousands.

    The 6-year rule is an absence rule: it extends an exemption you already had, it doesn’t create one. Rent from day one and move in years later, and the clock only starts at move-in — the earlier rental years stay taxable by day-apportionment, and with no main-residence period before the income use, there’s no market-value cost base reset either (see below).

    The mirror-image case matters too: you buy with tenants already in place and plan to move in “soon”. The law covers you from purchase if you move in as soon as practicable after settlement — a few weeks of genuine delay is fine, but collecting rent for a year while you get around to it is not.

    Moving back in resets the clock — but it has to be genuine

    Here’s the part that makes the rule genuinely powerful: every time the dwelling again becomes and ceases to be your main residence, you get a fresh six-year period. Move out for five years, move back in properly, live there a while, move out again — new clock, with no lifetime limit on re-use.

    The catch is the word “genuine”. The law sets no minimum stay, but a token return doesn’t reset anything — owners who “moved back” for five days or two weeks of maintenance between tenancies have had the reset denied. The ATO tests the facts: where your mail went, your electoral enrolment, utilities in your name, how long you stayed. Think months of real living there, not a long weekend with a paintbrush.

    The valuation rule nobody tells you about

    If you ever exceed the six years, a second rule decides how big your tax bill is — and the evidence for it must be gathered on the day you move out, years before you sell.

    When a home that was your main residence is first used to produce income, the tax law deems you to have re-acquired it at its market value on that date (section 118-192). Everything you paid before — purchase price, stamp duty, buyer’s agent fees — drops out of the cost base, replaced by that single market-value figure plus allowable costs incurred afterwards.

    This is usually good news: years of tax-free growth while you lived there are permanently locked out of CGT. But it only works if you can prove the market value — so get a formal valuation when the first tenant moves in and keep it with your tax records. A valuer’s report costs a few hundred dollars; reconstructing a market value six years later during an ATO review costs far more.

    Worked example: what overshooting the 6 years actually costs

    Enough theory. Here’s the full run-through with real 2026-27 figures — the calculation most articles never finish.

    Sarah’s story. Sarah bought a Brisbane townhouse in 2015 for $480,000 and lived in it as her main residence. On 1 June 2019 she moved to Sydney for work and rented the townhouse out. A valuer put its market value that day at $610,000 — she kept the report. She never bought another property, so no competing main residence claim.

    Her six-year window ran from 1 June 2019 to 31 May 2025. But she didn’t sell until 1 March 2027, for $840,000, with $20,000 in agent and legal fees. She overshot by 21 months. Here’s the tax office math:

    Step 1 — Deemed acquisition. For CGT purposes Sarah is treated as having bought the townhouse on 1 June 2019 for $610,000 (the s118-192 market-value reset). Her ownership period runs 1 June 2019 → 1 March 2027 = 2,830 days.

    Step 2 — Non-main-residence days. Days past the 6-year limit: 1 June 2025 → 1 March 2027 = 638 days.

    Step 3 — Capital gain, then apportion.
    $840,000 − ($610,000 + $20,000) = $210,000 total gain.
    Taxable portion: $210,000 × (638 ÷ 2,830) = $47,343.

    Step 4 — The 50% discount still applies. Sarah held the property for well over 12 months from the deemed acquisition date, so the discount method halves the taxable gain: $47,343 × 50% = $23,671 net capital gain.

    Step 5 — The actual tax bill. Say Sarah earned a $110,000 salary in 2026-27: adding the gain makes her taxable income $133,671. Using the 2026-27 tax brackets:

    Without the gainWith the gain
    Taxable income$110,000$133,671
    Income tax$23,520$30,621
    Medicare levy (2%)$2,200$2,673
    Total$25,720$33,294

    Extra tax caused by the 21-month overshoot: $7,574. Had Sarah signed the sale contract before 31 May 2025, the bill would have been zero. That’s the dollar value of watching the clock — and of having the 2019 valuation on file, without which the ATO would have worked from her $480,000 purchase price.

    Run your own numbers any time with our free CGT calculator — it handles the apportionment and the discount in one go.

    What changes on 1 July 2027

    The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026. From 1 July 2027, the 50% CGT discount is replaced for individuals, trusts and partnerships by cost base indexation plus a 30% minimum tax on net capital gains. Gains that accrued before 1 July 2027 keep the old treatment.

    Here’s what that means for the 6-year rule specifically:

    The rule itself survives. The main residence exemption is explicitly unchanged — sell within your six years after 1 July 2027 and it’s still fully tax-free, exactly as today.

    Partial gains get complicated. If you exceed the six years and sell on or after 1 July 2027, the taxable portion of your gain falls under the new regime: indexation instead of the flat 50% discount, with a 30% floor on the effective tax rate. For long-held property with strong real growth, indexation is typically less generous than the old discount.

    A pre-July-2027 valuation is now doubly valuable. Because pre-1-July-2027 accrual keeps the old rules, a market valuation dated just before the changeover helps split your gain between the two regimes cleanly. If your absence is already pushing past six years, talk to your accountant about timing before the 2027-28 financial year — the ATO is still publishing operational guidance, so don’t treat any of this as settled detail.

    7 common mistakes

    1. Assuming it’s automatic. The exemption isn’t granted because you feel the place was your home — it’s a choice you evidence. No proof of genuine residence, no exemption.

    2. No valuation when the tenant moves in. The single most expensive omission. Without a market value at first income-producing use, you can’t use the s118-192 reset properly.

    3. Nominating another property at the same time. Buy a new home to live in while the old one is rented? You must choose which carries the main residence exemption for CGT — many only discover this when one property sells with an unexpected tax bill. (Couples get one shared choice: spouses and de facto partners are generally treated as having a single main residence between them.)

    4. Counting “about six years”. The ATO counts days. A contract signed three weeks after your window closed is fully outside the exemption for those extra days’ worth of gain.

    5. Moving overseas and assuming the rule still works. Since 1 July 2020, foreign residents for tax purposes generally lose the main residence exemption entirely when they sell. If you move abroad and become a non-resident, the 6-year rule won’t save you at sale time. Get advice before you leave, not after you list.

    6. Confusing CGT with land tax. The 6-year rule is federal CGT law. State land tax is a completely separate system with its own principal-place-of-residence absence rules — winning on CGT doesn’t mean you won’t get a land tax assessment. Check your state revenue office’s rules independently.

    7. Forgetting the 2-hectare limit. The exemption covers your dwelling plus adjacent land up to two hectares. Larger holdings get the exemption apportioned.

    Checklist: before the tenant moves in

    Before the tenant moves in, do these five things:

    1. Get a formal market valuation dated as close as possible to the first day of income-producing use. Keep the report forever.
    2. Record the exact date you moved out and the date the first tenancy (or listing) began.
    3. File your proof of residence: electoral roll history, driver’s licence address changes, utility bills, council rates notices.
    4. Note in writing that no other property will be treated as your main residence during the absence — revisit this if you buy again.
    5. Keep claiming rental deductions — nominating the property as your main residence for CGT doesn’t stop you deducting interest, rates, insurance and depreciation.

    Frequently asked questions

    Do I need to tell the ATO before I move out?

    No — you make the choice on your tax return in the year you sign the sale contract. But the evidence (valuation, dates, proof of residence) has to be created now; you can’t reconstruct it convincingly years later.

    I moved back in for a month between tenants. Does the clock reset?

    Almost certainly not. The dwelling must genuinely become your main residence again, and the ATO tests that on the facts: where you lived day to day, where your mail and electoral enrolment were, how long you stayed. Think months of real residence, documented like your original occupancy — not a maintenance stopover.

    Can my partner and I each claim a different property?

    Generally no. Spouses — including de facto partners — share a single main residence between them for CGT. If you each own a property, you either nominate one as the shared main residence or split the exemption.

    Does the 6-year rule apply to units and townhouses?

    Yes — any dwelling: houses, units, townhouses, even a caravan or houseboat if it was genuinely your main residence.

    I left my home vacant for ten years and never rented it. Any CGT?

    If it genuinely wasn’t used to produce income, there’s no six-year limit — you can keep treating it as your main residence indefinitely, provided you didn’t nominate another property instead. The exemption only starts eroding once income-producing use begins.

    I’m renting out rooms on Airbnb while still living there. Does that use up my 6 years?

    That’s a different problem: partial income use while you live there means the exemption is apportioned by floor area, and it can taint the market-value reset. If any part of your home earns income while you live there, get specific advice.

    The bottom line

    The 6-year rule is one of the most valuable concessions in Australian tax law: live in a home, move out, rent it for up to six years, sell it tax-free — and reset the clock every time you genuinely move back. The price of admission is evidence gathered early: a valuation on day one of renting, proof you lived there, and a clear choice about which property carries the exemption. Overshoot the window and Sarah’s example is what awaits — apportioned gain, halved by the discount, taxed at your marginal rate. With the 1 July 2027 overhaul changing how partial gains are taxed, now is the time to check where your clock stands. For the broader picture, see our complete guide to CGT on property and how the 50% CGT discount works.

    General information only — not personal tax advice. The 2027 reform detail reflects legislation as enacted; the ATO is still publishing operational guidance.