Capital gains on absence from main residence

April 2017

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.