How the Six-Year Rule Reset Cuts CGT on Your Home
- angelinaaanderson
- 4 days ago
- 3 min read
The Six-Year Rule Reset: How Moving Back Into Your Home Can Save You Thousands in CGT
Many Australians know about the six-year rule for Capital Gains Tax, but very few understand the part that matters most: the six-year rule reset. Used correctly, this mechanism can dramatically reduce or even eliminate a capital gain on a property that has been rented out.
At The Tax Accountant, we help clients use these rules confidently so they avoid unnecessary tax and protect their long-term wealth.
What Is the Six-Year Rule?
If you move out of your main residence and rent it out, you can continue to treat it as your home for CGT purposes for up to six years. During this period, any gain is still exempt, even though income is being produced.
The catch:You can only apply this rule to one property at a time.
The Reset Most People Don’t Know About
The biggest misunderstanding is this: if you move back in and the property again becomes your genuine main residence, the six-year period resets.
This means you get another full six years the next time you move out.
The ATO doesn’t require you to live there for a minimum set period, but it does require genuine occupation. Your belongings, utilities, mail, and day-to-day life must reflect that the property is your home.
A Simple Example
You buy a home and live in it for several years.
2015: You move out and rent it. Your six-year exemption period runs until 2021.
2020: You move back in. Your main residence status is reinstated.
2021: You move out again and rent it. You now have a new six-year period running until 2027.
If you sell before 2027, the gain can remain fully exempt.
This is a powerful planning tool for Australians who relocate for work, move overseas temporarily, or alternate between investment and personal use.
Why the Reset Matters
This rule can save clients tens of thousands in CGT by:
allowing multiple rental periods without triggering tax
preventing a portion of the gain becoming taxable unnecessarily
making property strategy more flexible for families, expats, and business owners
It is especially valuable for those with changing work arrangements or who buy and sell property regularly.
What the ATO Looks For
To apply the reset, the property must genuinely be your main residence again. The ATO considers:
where you actually live
where your personal belongings are kept
whether utilities and services are connected in your name
where your mail is sent
your intention and pattern of occupation
Short stays that lack genuine residence may not qualify.
Practical Tips to Stay Protected
Keep clear records of move-in and move-out dates.
Document your occupancy with bills, electoral roll, driver’s licence address and similar evidence.
Review your timeline before renting out or selling.
Get a property valuation when first renting, as that may reset the cost base.
Seek advice before applying the rule across multiple properties.
Final Thoughts
Navigating the main residence rules is complex, and small timing errors can create big unexpected tax bills. Understanding how the six-year reset works gives you more control and better outcomes.
If you want tailored guidance for your situation or need help assessing how the rules apply to past or future property decisions, The Tax Accountant is here to help.
Need help applying the six-year rule to your property?
CGT mistakes are expensive and hard to unwind. If you’ve rented your home, moved overseas or changed your property use, we can calculate the exemption correctly and help you plan ahead.