The Six-Year Rule: When Your Home Stops Being CGT-Free

Treasury puts the main residence exemption's discount component at $32 billion for 2025–26, the top line in its list of large tax breaks. But the exemption isn't automatic: this video walks through the absence choice (the "six-year rule") when you move out and rent your home, how the taxable slice is worked out once the six years run out, four traps, and what the 1 July 2027 changes do and don't touch. General information only — not financial advice. This video doesn't consider your personal circumstances. Rules and thresholds change; check the ATO, Moneysmart and Services Australia for your situation, or talk to a licensed financial adviser. Chapters 0:00 $32 billion, and a limit 0:32 The rule in one sentence 1:06 Step 1: moving out (the six-year rule) 1:41 Step 2: one home at a time 2:24 Step 3: past six years and the market-value reset 3:27 Mia's unit (invented example) 4:25 Version 2: eight years of renting 5:39 Traps 1–2: renting first, part of the home 6:32 Traps 3–4: foreign residents, dates and records 7:45 What changes from 1 July 2027 8:32 Recap and where to check Mia is an invented example: her prices, dates and valuation are made up and costs are simplified ($560,000 purchase, $640,000 market value when first rented, $25,000 selling costs). Both versions assume she is an Australian resident for tax purposes throughout, has no competing main residence, didn't use the unit to earn income before moving out, and that the sale contract and legal transfer happen on the same day, with inclusive day counts as in the ATO's worked example. On screen: $285,000 × 730 ÷ 2,923 = $71,177 → × 50% = $35,588 (rounded). The calculation is our own and can be re-run from the episode files. Sources (rules as at 2026–27; ATO pages without a link are on ato.gov.au under Capital gains tax) S1. Treasury, 2025–26 Tax Expenditures and Insights Statement (Table 1.2) — https://treasury.gov.au/sites/default... S2, S3. Income Tax Assessment Act 1997, Compilation 267, vol. 3 (Subdivision 118-B main residence; ss 104-10, 115-25, 115-100) — https://www.legislation.gov.au/C2004A... S4. Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (No. 49, 2026) — https://www.legislation.gov.au/C2026A... S5. ATO, Treating former home as main residence — https://www.ato.gov.au/individuals-an... S6. ATO, Eligibility for main residence exemption S7. ATO, Using your home for rental or business S8. ATO, Moving to a new main residence S9. ATO, Main residence exemption for foreign residents S10. ATO, CGT discount S11. ATO, Tax Time toolkit for investors: CGT and the main residence exemption S12. ATO, When does a property stop being your main residence? S13. ATO, Living separately to your spouse or children S14. ATO, Home on more than 2 hectares S15. ATO, Keeping records for property S16. ATO, CGT when selling your rental property S17. ATO, What is capital gains tax? S18. ATO, Latest news on tax and superannuation law and policy S19. Budget 2026–27, Tax reform — https://budget.gov.au/content/04-tax-... S20. Budget 2026–27, Tax explainer: negative gearing and capital gains tax reform S21. Treasury, Budget 2026–27 tax system changes — https://treasury.gov.au/policy-topics... S22. Treasurer, second reading speech, Tax Reform No. 1 Bill (28 May 2026) S23. Federal Register of Legislation: ITAA 1997 versions and later 2026 amending Acts (checked 3 Oct 2026) Kooka is an animated character, not a financial adviser. Credits Legislation from the Federal Register of Legislation (legislation.gov.au), licensed CC BY 4.0 (https://creativecommons.org/licenses/.... Rules are summarised and redrawn as our own diagrams. Treasury and ATO material is used for facts and redrawn; using it doesn't mean they endorse this video. Music: "Wholesome" by Kevin MacLeod (incompetech.com), licensed under Creative Commons: By Attribution 4.0 (https://creativecommons.org/licenses/.... Source: https://commons.wikimedia.org/wiki/Fi.... Looped, faded, de-clicked and level-adjusted.