Main Residence Absence Provisions

Seems to be some confusion regarding the main residence absence provisions and how they work.

This concession is sometimes referred to as the ‘absence’ provision or the ‘six year’ rule and does not just apply to moving interstate. It applies whenever you move from your main residence. Even if it’s ‘down the road’.

Where someone makes this choice to apply the absence provisions they cannot treat another property as their main residence. So if the absence provisions are applied to a PPOR that becomes an IP and they then move into a new PPOR that new PPOR will be subject to CGT at some point in the future.

I’ve read on forums where some people think that once the six years is up and you go over that six year period, and don’t sell the property within the six year period, that the absence provisions don’t apply at all. Fortunately this isn’t true and merely an urban legend.

If you keep renting the property for more than 6 years you don’t lose the ability to use the six year rule. Again another misconception which is out there. You can apply the absence provisions for the first six year period for which it was rented and then you will be subject to CGT on the remaining period.

The six year rule also resets itself. What does this mean. Well let’s say you buy a property in Aug 2012. You move into the property and make it your main residence. Then in Aug 2014 you move out and rent the property until Aug 2017 when you move back in again. Then in Aug 2019 you move out and rent it again The six year absence provisions can apply to the first period i.e. Aug 2014 to Aug 2017. Then when you move out again in Aug 2019 the six year rule STARTS again. So yes you could end up with years and years of potentially tax free capital gains !!!

• This topic was modified 9 years, 3 months ago by  PTSMike.