• Moving from one main residence to another

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    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:

    • the old dwelling 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 the old dwelling to produce assessable income in any part of that 12 months when it was not your main residence, and
    • the new dwelling becomes your main residence.

    If you dispose of the old dwelling 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.

    If you disposed of your old home before 1 July 1998, both homes are exempt for a maximum of three months.

    Example: Exemption for both homes

    Jill and Norman bought their new home under a contract that was settled on 1 January 2006 and moved in immediately. They sold their old home under a contract that was settled on 15 April 2006. Both the old and new homes are treated as their main residence for the period 1 January to 15 April even though they did not live in the old home during that period.

    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. You get only a part exemption when a CGT event happens to your old home.

    Example: Part exemption for a first home

    Jeneen and John bought their first home under a contract that was settled on 1 January 1998 and moved in immediately. It was their main residence until they bought their second home under a contract that was entered into on 2 November 2004 and settled on 1 January 2005.

    They retained the first home after moving into the new one but did not use it to produce income. They sold the first home under a contract that was settled on 1 October 2005. They owned this home for a total period of 2,831 days.

    Both homes are treated as their main residence for the period 1 April 2005 to 1 October 2005, the last six months that Jeneen and John owned their first home. Therefore, their first 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 90 days from 1 January 2005 to 31 March 2005, when the old home was not their main residence, are taken into account in calculating the proportion of their capital gain that is taxable (90   2,831).

    Because they entered into the contract to acquire their old home before 11.45am (by legal time in the ACT) on 21 September 1999 and entered into the contract to sell it after that time, and held it for at least 12 months, Jeneen and John can use either the indexation or the discount method to calculate their capital gain.

    Last modified: 06 Oct 2009QC 18504