A Sneak peak into how the 6 year capital gain rule could effect your selling goal ? – SARE Property Sales

A Sneak peak into how the 6 year capital gain rule could effect your selling goal ?

July 3, 2025

A Sneak peak into how the 6 year capital gain rule could effect your selling goal ?

I get asked more and more frequently about capital gain and how that effects my clients when selling their home, so with thanks to the ATO I have attacjed a fact sheet that provides a snapshot into the key points to consider when talking Capital gains and selling your investment property. The fifth year of ownership could be critical in your selling decision.

My advise is always is ring your accountant /financial adviser and then two other licenced financiers and followup with the ATO hotline to ensure you receive the most up to date advise on this before approaching your realestate agent.

The 6 year capital gain rule explained, with information provided straight from the ATO

Treating former home as main residence | Australian Taxation Office https://share.google/GNEaChnLOOslThsJn

Did you know that you might still be able to claim the main residence capital gains tax (CGT) exemption even after moving out of your home?

( all information provided in this email has been supplied by the ATO and should be used as a guide only as it can change at any time)

Currently if your former home was your main residence and you move out, you can continue to treat it as your main residence for tax purposes:

For up to 6 years if you rent it out (commonly known as the ‘6-year rule’)

Indefinitely if you don’t use it to earn income

This means you could potentially avoid paying CGT on a home you’ve moved out of

—as long as certain conditions are met.

Real-World Example:

James bought a house in Brisbane in 2013 and lived there until 2015, when he moved to Perth and started renting it out. He bought a new home in Perth in 2020 and sold the Brisbane house in 2025.

He claimed the CGT main residence exemption for the five years it was rented—thanks to the 6-year rule. But from 2020 to 2025, after he moved into his Perth home, that exemption no longer applied, and he had to declare a capital gain on his tax return for that final period.

What You Should Know:

✔️ The exemption only applies if the property was your main residence first

✔️ You can only treat one property at a time as your main residence (except for a brief 6-month overlap when moving)

✔️ The rules differ depending on whether the property was used to produce income

Planning to rent out your former home or sell it soon?

Understanding these rules can help you minimise your capital gains liability and avoid surprises at tax time.

If you’d like help navigating these rules or calculating your capital gains, reach out to your accountant, financial planner

or simply ring the ATO hotline, they are upto speed on what the current rules are

and how they relate to your personal situation.