Capital Gains Tax and the 6-year rule

It’s a given that property investors want to make the most of their investments. Staying on top of deductions, rates and exemptions is vital, and a little bit of strategic planning can go a long way too. With that in mind, we want to remind you about a special Capital Gains Tax (CGT) exemption called the 6-year rule.

Put quite simply, the 6-year rule may apply when you rent out your principal place of residence (PPOR) and your reason for doing so is one of a list of conditions set by the Australian Taxation Office (these conditions may include moving overseas or interstate for work or an extended holiday or moving in with a sick relative). If the property is your main residence, you lived in the property when it was first bought (i.e. you didn’t rent it out immediately after it was purchased) and you rented out the property for less than 6 years, you may be entitled to a full CGT exemption after the sale of the property.

It’s also interesting to note that after moving out of the property, the owner can move in and out again and a new six-year period will commence.

Please note: the information contained above is intended as a guide only. It does not replace the need to speak to a qualified accountant about your unique circumstances.

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