Capital gains on absence from main residence

Where a taxpayer initially occupies a residence then vacates it and uses it to produce assessable income, the main residence exemption can continue to be claimed for a period of up to six years.

The taxpayer is eligible for another six-year period each time the residence becomes and ceases to be their main residence.

Where a taxpayer vacates their main residence and does not use it to produce assessable income, the main residence exemption will apply indefinitely.

These concessions do not enable the taxpayer to nominate another residence to be their main residence at the same time.

This does, in theory, allow the taxpayer to move into a property when they buy it, rent it out for six years, and then:

a) move back in, or
b) keep it vacant and never pay capital gains tax.

This is entirely legal of course, capital losses can occur as well.

For advice and guidance on capital gains tax, call in and see one of our TaxAssist accountants in Sydney, Mid North Coast or the Gold Coast.

Date published 26 Apr 2017

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.