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  • Moving to another main residence

    If you acquire a new home before you dispose of your old one, both dwellings are treated as your main residence for up to six months if:

    • you lived in your old home and it was your main residence for a continuous period of at least three months in the 12 months before you disposed of it
    • you did not use it to produce assessable income (such as rent) in any part of that 12 months when it was not your main residence
    • the new dwelling becomes your main residence.

    So if you sell your old home within six months of acquiring the new one, both dwellings are exempt for the whole period between when you acquire the new one and dispose of the old one.

    Example: Exemption for both homes

    Jill and Norman bought their new home under a contract that settled in January and they moved in immediately. They sold their old home under a contract that settled in April.

    Both the old and new homes are treated as their main residence for the period January to April, even though they didn't live in the old home during that period.

    End of example

    Old home sold after six months

    If it takes longer than six months to dispose of your old home, both homes are exempt only for the last six months before you dispose of the old one. If you decide to claim the main residence exemption for your new home from the time you first move in, then your old home will be only partially exempt from CGT.

    Example: Partial exemption for old home

    Jeneen and John bought their home under a contract that settled on 1 January 1999 and they moved in immediately. It was their main residence until they bought another home under a contract that was entered into on 2 November 2015 and settled on 1 January 2016.

    They retained their old home after moving into the new one on 1 January 2016, but didn't use the old one to produce income. They sold the old home under a contract that settled on 1 October 2016. They owned this home for a total period of 6,484 days.

    Both homes are treated as their main residence for the period 1 April 2016 to 1 October 2016, the last six months that Jeneen and John owned their old home. Therefore, their old home is treated as their main residence only for the period before settlement of their new home and during the last six months before settlement of the sale of the old home.

    The 91 days from 1 January 2016 to 31 March 2016, when the old home is not their main residence, are taken into account in calculating the proportion of their capital gain that is assessable (91 ÷ 6,484).

    End of example

    If it takes longer than six months to dispose of your old home, you can get an exemption for the old home for the period in excess of the six months by choosing to treat it as your main residence for that period under the ‘continuing main residence status after moving out’ rule. If you do this, you get only a partial exemption when you dispose of your new home.

    Example: Partial exemption for new home

    The facts are the same as in the previous example, except that Jeneen and John choose to continue to treat their old home as their main residence for the period from 1 January 2016 to 31 March 2016 under the 'continuing main residence status after moving out' rule.

    This means they get a full exemption when they sell it.

    Because both homes can only be exempt for a maximum of six months when moving from one to the other, Jeneen and John will not get a full exemption for their new home when they sell it. The exemption will not be available for the new home for the 91 days from 1 January 2016 to 31 March 2016.

    End of example

    See also:

    Last modified: 17 Jul 2017QC 52188