Six-Year Rule Valuations

The six-year rule lets you keep treating a former home as your main residence for up to six years while it earns rent. If you sell inside the window the gain can be fully exempt. If you do not, the taxable share is measured from the market value on the day it first earned income, which is the valuation we prepare.

At a glance

Section 118-145 allows a former main residence to keep its exempt status for up to six years while producing income, and indefinitely if it produces none
A fresh six-year period applies to each absence that follows genuine reoccupation
You cannot treat another dwelling as your main residence for the same period, apart from the six-month changeover overlap
Where the exemption ends up partial, the gain is measured from the section 118-192 reset value at the first-income date
Foreign residents at the time of the CGT event generally lose the exemption entirely for events after 30 June 2020

How the rule works

Move out of your home, rent it out, and section 118-145 of the Income Tax Assessment Act 1997 gives you a choice: keep treating it as your main residence for CGT purposes for up to six years. Sell within that window, with the conditions met, and the main residence exemption can cover the whole gain.

Where the property produces no income during the absence, the choice runs indefinitely. There is no six-year cap on a vacant former home.

The choice is made in the return for the year the CGT event happens, which means you decide with hindsight. If you own two properties and only one can be sheltered, you can wait and see which one gained more before nominating.

$297Residential report, AUD inc. GST

24 to 48 hoursTypical report turnaround

Australia-wideAll states and territories

Certified Property ValuerChartered Accountant, signed by the valuer who prepared it

The conditions

It was your main residence first. You must have actually lived in the property and established it as your home before the absence. A property rented from settlement day never qualifies.
One main residence at a time. Choosing the old home means you cannot also treat a new home as exempt for the same period, apart from the six-month changeover overlap. One of the two properties will accrue taxable days.
The six years apply per absence, not as a lifetime allowance.
Residency at the CGT event matters. A foreign resident at the time of sale generally loses the exemption for events after 30 June 2020, six-year choice included, subject to a narrow life events exception.

Why a valuation still matters

Here is the part owners miss. The day the property first earns income, section 118-192 usually resets the cost base to the market value on that day, and the reset is mandatory where it applies. It happens whether or not you end up using the six-year rule.

If you sell inside six years and the exemption covers everything, the reset value never gets used. If you exceed six years, buy another main residence, or become a foreign resident before selling, part or all of the gain becomes taxable, and it is measured from that reset value.

You cannot know at the time which of those futures you are in, which is the argument for a capital gains tax valuation at the changeover. Plans change, tenants stay, jobs move. A valuation at the changeover costs a few hundred dollars and is the only version of that evidence that will ever be cheap. Without it, you are relying on a retrospective valuation years later, prepared from thinner evidence.

Any taxable share of the gain is taxed under the CGT changes from 1 July 2027. Our CGT calculator shows how the reset date splits a gain on a property held across it.

Renting out your former home?

Get the market value at the date it first earned income while the evidence is current. Independent reports signed by a Chartered Accountant and Certified Property Valuer. Residential $297 inc. GST, delivered in 24 to 48 hours.

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Using it more than once

The six-year clock resets. Each period of absence that follows a period of genuinely living in the property gets its own six years. Move back in, re-establish the property as your home in substance, then move out again, and a new window opens.

What does not work is a token stay between tenants. The test looks at whether the property was genuinely re-established as your home: length of stay, where your family sleeps, where your possessions are, your address on the electoral roll and with service providers. Four worked scenarios are set out in six-year rule examples.

Three traps

No valuation at the rental start date. The reset still applies. You are simply left proving a years-old value later, from evidence that thins each year.
Claiming two exemptions at once. Couples with a home each, or owners who buy before selling, cannot shelter both properties for the same period beyond the changeover window. The unsheltered property needs clean dates and a value.
Selling as a foreign resident. The exemption is generally lost if you are a foreign resident at the time of the CGT event. Timing the sale before departure, or after resuming Australian tax residency, can be the difference between no tax and tax on the whole gain measured from the reset value. See expat and foreign resident valuations.

Keep the records that prove the timeline as well as the value: lease commencement, the managing agent's agreement, utility connections and disconnections, electoral roll changes and mail redirection. The valuation gives you the number; those records establish the dates it attaches to.

The 2027 reform and the six-year rule

The Treasury Laws Amendment (Tax Reform No. 1) Act 2026, enacted 26 June 2026, does not change the main residence exemption or the six-year rule. What it changes is how any taxable portion of your gain is taxed from 1 July 2027, replacing the 50 per cent discount with cost base indexation and a 30 per cent minimum tax.

For a former home rented beyond six years, that means two dated values may end up in the file: the section 118-192 reset value at the first-income date, and the 1 July 2027 market value that splits the taxable gain between the old and new regimes. See the 1 July 2027 valuation page.

Cost and turnaround

Report	Fee (AUD inc. GST)	Turnaround
Residential, current or retrospective date	$297	24 to 48 hours
Mixed use or commercial	$595	24 to 48 hours

A retrospective date costs the same as a current one.

Common questions

How does the six-year rule work?

Section 118-145 lets you keep treating a former home as your main residence for up to six years while it produces income, and indefinitely if it does not. Sell within the window with the conditions met and the exemption can cover the whole gain. You cannot treat another dwelling as your main residence for the same period.

Can I use the six-year rule more than once?

Yes. A fresh six-year period applies to each absence that follows a period of genuinely living in the property as your home. Reoccupation must be real rather than a token stay between tenancies.

Do I need a valuation if I am relying on the six-year rule?

It is strongly advisable. Section 118-192 resets your cost base to the market value on the day the property first earns income regardless of whether you later use the six-year choice. If anything causes the exemption to become partial, that reset value is what the taxable gain is measured from.

What happens if I go past six years?

The absence beyond six years is no longer covered, so part of the gain becomes taxable. The taxable portion is worked out from the section 118-192 reset value and apportioned across the period, which is why the value at the first-income date matters even years later.