Tax
Your old home is not tax-free just because you once lived in it
Most people who rent out their old home have heard of the six-year rule, and many think it makes the sale tax-free. It only covers the days it covers, it is counted separately for each time you are away, and it only works if your tax return claims it. This calculator counts your days, builds your cost base and prices every legal way to report the same sale.
The six-year rule does not make a sale tax-free. It covers days, and only the days you claim.
When you move out of your home, the absence choice in section 118-145 lets it keep counting as your main residence while you are away. If it earns rent, that cover lasts up to six years for each time you are away. If it sits empty, there is no time limit. Every day it is not covered is a taxed day, and the taxed part of the gain is simply those days divided by the days you owned it.
Two things catch people out. First, the choice is made on your tax return, not on a form, so a return filled in without thinking about it often claims nothing at all. Second, if you lived in the home from the day you bought it until the day you first rented it out, and that was after 20 August 1996, the law treats you as having bought it again on that day, for what it was then worth. That is the market value rule in section 118-192. It changes both your cost base and the days that count, and it can raise the tax as well as cut it.
Two people can sell the same house on the same day for the same price and pay very different tax, because of the dates they moved out, the day it was first rented and what their return claims.
Those dates are fixed once the contract is signed. The choices about how to report them are not.
What the calculator works out for you
- How much of your gain is taxed, from your own dates. The days you lived there, the days the absence choice covers, and the days that are left over, stretch by stretch.
- The six-year window, counted for each time you were away. Moving back in starts a fresh six years, so two rentals of four years each can both be fully covered.
- Whether the market value rule applies to you. If it does, your cost base becomes the value on the day it was first rented, and you see the tax both ways.
- The rules that shrink the exemption. Part of the home used for a business or let out (section 118-190), land over 2 hectares, and selling as a foreign resident, which from 1 July 2020 generally means no exemption at all.
- The tax at your own rates. The 50% discount for a home held more than 12 months, then the rest added to your other income for the year the contract is signed, on 2026–27 income year rates.
What you get in the full report
- Every legal way to report the sale, priced and ranked. Making the absence choice or not, moving back in first, signing in the next income year, and splitting the years with another home, each ranked on what the sale leaves you after tax.
- The working, so it can be checked. The day count stretch by stretch, the cost base line by line, and the tax sliced across the brackets it lands in.
- What the valuation is worth. Where the market value rule applies, the tax with it and without it, beside what a valuer typically charges for one date ($700 to $1,400).
- What changes from 1 July 2027. The 50% discount is replaced that day. The report shows which options fall before it, and marks any figure for a later sale as worked out on the rules up to 30 June 2027.
What it will not do
A registered tax agent typically charges $1,500 to $4,000 for a written review of the capital gain on a former home. This report costs $19, once. It is not tax advice and it does not recommend any option: it shows what each one costs. It cannot decide facts that are a matter of judgement, such as whether a place was really your main residence, what a property was worth on a day years ago, or whether a "life event" lets a foreign resident keep the exemption. Those are for a registered tax agent, and the report is the document to hand them. What you pay is decided by the Australian Taxation Office on the return you lodge.
What people ask before they run it
How does the 6-year rule work if I rent out my old home?
The six-year rule lets you keep treating your old home as your main residence for up to six years of each absence while it earns rent. If it earns nothing, there is no time limit at all. Each time you move back in and genuinely make it your main residence again, a fresh six-year period starts. The part people miss: you make the choice through the way you fill in your tax return, not by lodging a form. Nothing prompts it and nothing reminds you.
What is the market value rule when I first rent out my home?
Section 118-192 treats you as having bought your home again, at its market value, on the day it first earned income. It applies if that day was after 20 August 1996 and you would have been fully exempt had you sold the day before. Every dollar of growth before that day leaves the sum, and so does every day before it, including the years you lived there. It can cut either way, which is why it is worth working out rather than assuming. It also needs a valuation for that one day.
How much capital gains tax will I pay on a house I used to live in?
It depends on how many of your ownership days the home was not your main residence. Take the gain, tax only the share of days that were not main residence days, halve that if you owned it for more than 12 months, and add it to your income for the year. On the 2026–27 rates the top rate is 47% including the Medicare levy. This calculator does the day count for you and shows every step, including the ones most returns leave out.
Do I still get the exemption if I am living overseas when I sell?
Generally, no. Since 1 July 2020, a foreign resident on the day the contract is signed gets no main residence exemption at all, however long they lived there. Not a smaller one: none. There is a narrow "life events" test for an absence of six years or less. Tax residency is a question of fact, not citizenship or visa, and it is tested on the day of the contract. That makes it a date, which makes it something this calculator can price.
What is the main residence exemption in Australia?
The main residence exemption is the rule in section 118-110 that takes capital gains tax off the sale of your home. You get all of it if the home was your main residence for the whole time you owned it, never earned income, and sits on 2 hectares or less of land. Miss any one of those and you get a partial exemption, worked out in days. There is no form: it applies on the facts.
Does the contract date or the settlement date count for CGT?
The contract date counts. A capital gain belongs to the income year the sale contract is signed in, not the year it settles. Sign before 30 June and the gain goes on this year's return, on this year's income. Sign after and it moves to next year's return and next year's rates. Your ownership period also runs from contract to contract, not settlement to settlement.
Can I have two main residences at the same time?
Generally, no. Only one home at a time can be your main residence, and a couple can only have one between them. There is a six months overlap while you move from one main residence to the next, under section 118-140. If a couple choose different homes, section 118-170 splits the exemption, so each home gets half rather than both getting all of it.
Does moving back in reset the six-year rule?
Yes, moving back in starts a fresh six-year clock. Each absence gets its own six years, so genuinely living there again ends one absence, and the next one starts a new count. Every day back in the house is also an exempt day. It does not undo days already past the old window: those stay taxable. Whether you really moved back in is judged on facts such as your mail, the electoral roll and the utilities.
Do I get the 50% CGT discount on a former home?
Usually, yes, if you are an individual and owned the home for more than 12 months. The 50% discount halves the taxable part of the gain, and it is applied after the main residence days are taken out and after any capital losses. If the market value rule applied, the twelve months run from the day the home first earned income. A foreign resident gets no discount for the period after 8 May 2012.
Is this calculator tax advice?
No. This is an information service: it applies the published rules to the dates and figures you enter and shows what they produce, with every working visible. It ranks options on one stated measure, what the sale leaves you after capital gains tax, and does not recommend one. A registered tax agent typically charges $1,500 to $4,000 for this analysis, and that includes advice we are not registered to give. Bring this to them and the conversation starts at the question that actually needs a licensed answer.
Everything on Main Residence CGT
Your estimate is free, and it is a real answer.
Works out how much of the capital gain on a former main residence is taxed in Australia - the days-based apportionment in section 118-185, the six-year absence rule in section 118-145, the market value reset in section 118-192, partial business use, the 50% discount and the tax at your own marginal rate - then prices every lawful option side by side and ranks them on what the sale leaves you after tax.
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