CGT Main Residence Six-Year Rule Calculator (Australia 2026)

What Is the Main Residence Six-Year Rule?

The six-year rule under section 118-145 of the Income Tax Assessment Act 1997 lets Australian taxpayers continue to treat a dwelling as their main residence for capital gains tax purposes after they have stopped living in it — extending the main residence exemption into a period of absence. If the dwelling is used to produce assessable income (e.g., rented out) during the absence, the maximum continuous period that can be covered is six years per absence. If the dwelling is not income-producing — left vacant, or used by family without rent — the absence period is unlimited. The rule is elective: you choose which dwelling to treat as your main residence under section 118-140, and you can only have one main residence at any given time. Source: ATO — Six-Year Rule.

The choice to apply section 118-145 is made when you lodge your tax return for the income year in which the CGT event occurs. Choosing the absent home as your main residence under the six-year rule means any other dwelling you owned during that period (e.g., the new home you moved into) cannot ALSO be treated as main residence — there is a single overlap allowance of six months under section 118-140 when transitioning between two homes. Last updated: May 3, 2026.

How the Six-Year Reset Works

The six-year cap is per absence period, not lifetime. If you move back into the dwelling and re-establish it as your main residence for any meaningful period, then move out again, a fresh six-year window begins. There is no minimum re-occupation period in section 118-145 itself, but the ATO will scrutinise short re-occupations that look like artificial resets — utility connections, mail forwarding, electoral roll registration, and family activity at the property are typical evidence of a genuine re-establishment. Strategic re-occupation between rental periods can in principle extend the rolling exemption indefinitely.

Importantly, if absence exceeds six years while the dwelling is rented, only the period beyond the six-year cap becomes a partially taxable. The non-exempt portion of the eventual capital gain is apportioned by days: Non-exempt gain = Total gain × (Days beyond six-year cap ÷ Total ownership days). The taxable portion still benefits from the 50% CGT discount under section 115-25 if the dwelling has been held for more than 12 months — which it typically has by the time the cap is exceeded.

Apportionment and the 50% CGT Discount Interaction

Where part of the gain is exempt under the main residence rule and part is taxable (because absence exceeded six years rented, or because you used the property partly for income production from the start, or because you treated another dwelling as main residence for some of the period), the gain must be apportioned by ownership days. The apportionment formula in sections 118-185 and 118-190 is: Non-exempt gain = Total capital gain × (Non-main-residence days ÷ Total ownership days). The non-exempt component then qualifies for the 50% CGT discount if the asset was held for more than 12 months and the taxpayer is an individual or trust (not a company).

This calculator applies the formula automatically: it counts the actual main residence months, applies the six-year absence cap when rental applies, computes the non-exempt portion by days, halves it for the discount (where eligible), and applies your marginal tax rate plus optional Medicare Levy. Source citation for the methodology: ATO Capital Gains Tax + Main Residence Exemption + Six-Year Rule pages on ato.gov.au.

Foreign Resident and Other Restrictions

Since 9 May 2017 (with transitional protection until 30 June 2020 for properties purchased before that date), foreign residents have generally lost the main residence exemption entirely on Australian dwellings sold while they are foreign residents. Limited "life event" exceptions exist (terminal illness, death, marriage breakdown if foreign residency lasted under six years). If the dwelling is sold after the owner has resumed Australian tax residency, the exemption returns. The 50% CGT discount is also restricted for foreign residents — the discount portion is apportioned by Australian-resident days for any gain accruing after 8 May 2012.

Other limits on the exemption: maximum 2 hectares of land adjacent to the dwelling under section 118-115; structural improvements made after 19 September 1985 can be CGT event K6 if they exceed thresholds; a partial exemption applies if the dwelling was used to produce income from the start (cost-base reset under the home first used to produce income rule); and the absence rule generally does not apply if the dwelling was never your main residence in the first place (you must have established it as such before the absence began). Always verify your specific facts with current ATO guidance before relying on these calculations.