Moving from one main residence to another
This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.
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If you acquire a new home before you dispose of your old one, both dwellings are treated as your main residence for up to 6 months if:
- the old dwelling was your main residence for a continuous period of at least 3 months in the 12 months before you disposed of it and you did not use it to gain or produce assessable income in any part of that 12 months when it was not your main residence
- the new dwelling is to become your main residence.
If you dispose of the old dwelling within 6 months of acquiring the new one, both dwellings are exempt from capital gains tax for the whole period between acquisition of the new one and disposal of the old one.
If you disposed of your old home before 1 July 1998, both homes may be exempt from capital gains tax for only 3 months.
Exemption for both homes
Gabrielle and David bought and moved into their new home on 1 January 2000. They sold their old home on 15 April 2000. Both the old and new homes are treated as their main residence for the period 1 January to 15April even though they did not live in the old home during that period.
If it takes longer than 6 months to dispose of your old home, both homes are exempt only for the last 6 months before the disposal. You get only a partial exemption when a CGT event happens in relation to your old home.
Partial exemption for your first home
Colleen and John bought and moved into their first home on 1 January 1996. It was their main residence until they bought their second home on 1 January 1999. They retained the first home after moving into the new one but did not use it to produce income. They sold the first home on 30 September 1999. They owned this home for a total period of 45 months.
Both homes are treated as their main residence for the period 1 April 1999 to 30 September 1999, the last 6 months of ownership. Therefore, their first home qualifies as their main residence only for the period before they moved into their new home and during the last 6 months before its sale. The 3 months from 1 January 1999 to 30 March 1999, when it was not their main residence, is taken into account in calculating how much of any capital gain they made is taxable. In this case, three forty-fifths (3/45) of any gain is subject to capital gains tax. Colleen and John can choose to either reduce the gain by the 50 per cent CGT discount or calculate the gain using the frozen indexation method.
Last modified: 18 Sep 2009QC 18323