The six-year rule explained: renting out your former home

Last reviewed 13 October 2026 · General information, not advice

How the rule works

Your home is normally exempt from capital gains tax while it's your main residence. The “absence rule” lets you choose to keep that status after you move out. If you rent the property while you're away, the choice can cover up to 6 years from when you stopped living there. If it isn't used to produce income, it can continue indefinitely.

Each period of absence gets its own 6-year limit. If you move back in, that absence ends; if you later move out and rent it again, a new 6-year period starts.

You don't fill in a form to make the choice: it's reflected in your tax return for the year you sign the sale contract.

The conditions people miss

Only one main residence at a time

While you're using the rule for your former home, you can't treat another property — such as the home you've moved to — as your main residence (apart from an overlap of up to 6 months when moving house).

It must have been your home first

The rule can't cover a period before the property first became your main residence — for example if you rented it out before ever living in it.

Foreign residents

If you're a foreign resident for tax when you sign the sale contract, you generally can't claim the main residence exemption at all. This catches out Australians who move overseas and sell later.

Going over 6 years

If it's rented for longer than 6 years, the period after the limit is generally subject to CGT. The gain is apportioned, and the cost base for that part is usually the market value when the home was first used to produce income.

What to document from day one

• The dates you moved in and out, with evidence.
• A market valuation on the day it was first rented.
• Rental income and expenses for every year it's rented.
• Which property you treated as your main residence, year by year.

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