{"schema_version":"1.0","generated_by":"COLE — Citation Operations & Legal Engine","product_id":"cgt-main-residence-trap","title":"CGT Main Residence Trap Engine","site":"https://taxchecknow.com/au/check/cgt-main-residence-trap","authority":"ATO","authority_url":"https://www.ato.gov.au","jurisdiction":"Australia","language":"en-AU","currency":"AUD","last_verified":"April 2026","legislation":"Income Tax Assessment Act 1997 s.118-110 to s.118-195 — Main Residence CGT Exemption","legal_anchor":"ITAA 1997 — Main Residence Exemption (s.118-110)","deadline":{"iso_date":"2027-06-30T23:59:59.000+10:00","display":"30 June 2027","description":"Australian tax year end — CGT events in 2026/27 must be reported","urgency_label":"EOFY"},"key_facts":{"full_exemption":"Main residence entire ownership — never rented","6_year_rule":"Absent up to 6 years while renting — no other main residence","partial_exemption":"Rental/business days reduce exempt fraction","cgt_discount":"50% for individuals — asset held over 12 months","home_office_impact":"Dedicated room deductions remove partial exemption","legislative_anchor":"ITAA 1997 s.118-110 to s.118-195"},"formula":"Taxable Gain = Total Capital Gain × (Non-Exempt Days / Total Ownership Days). Non-Exempt Days = rental days + business-use days outside 6-year rule. After partial exemption: apply 50% CGT discount if held over 12 months.","thresholds":[{"label":"Always your main residence — never rented or used for business","value":1,"status":"clear"},{"label":"Rented out for under 6 years — 6-year rule may apply","value":2,"status":"approaching"},{"label":"Rented out for over 6 years — partial CGT likely","value":3,"status":"trap"},{"label":"Claimed home office deductions — partial exemption only","value":4,"status":"risk"},{"label":"Mixed use or multiple properties — complex position","value":5,"status":"deep_trap"}],"common_ai_errors":[{"error_id":1,"ai_says":"ChatGPT says: If it was your home you don't pay CGT","correct":"Reality: The exemption is proportional. If you rented the property at any point, the rental period may be taxable. The question is not whether it was your home — it is how many days it was NOT your exempt main residence."},{"error_id":2,"ai_says":"ChatGPT says: The 6-year rule means you can rent for 6 years tax-free anytime","correct":"Reality: The 6-year rule applies from the date you moved out as a continuous absence. You must not have another main residence during that period. Rental days before you moved out for the absence do not count toward the 6-year clock."},{"error_id":3,"ai_says":"ChatGPT says: Claiming a home office doesn't affect the main residence exemption","correct":"Reality: If you claimed a deduction for a dedicated room (not just a portion of shared space), the ATO treats that area as excluded from the main residence for CGT purposes. This creates a partial taxable gain on sale."},{"error_id":4,"ai_says":"ChatGPT says: You must live in the property to claim the main residence exemption","correct":"Reality: The 6-year absence rule allows you to claim the main residence exemption while absent — including while renting — for up to six years, provided no other property is nominated as your main residence during that time."}],"faq":[{"id":1,"question":"What is the main residence CGT exemption?","answer":"The main residence exemption under ITAA 1997 s.118-110 exempts your home from capital gains tax when you sell it. The exemption is automatic if the property was your main residence for the entire ownership period and was never used to produce income. If you rented it or used part of it for business, only the exempt fraction of the gain is tax-free."},{"id":2,"question":"What is the 6-year rule?","answer":"The 6-year absence rule (s.118-145) allows you to treat a property as your main residence for CGT purposes for up to six years while you are absent — including while renting it out. The rule applies only if you do not treat another property as your main residence during the absence. If you move back in and then move out again, the six-year clock resets."},{"id":3,"question":"How is the taxable portion calculated?","answer":"The taxable portion is calculated as: non-exempt days divided by total ownership days, multiplied by the total capital gain. Non-exempt days include any days the property was rented, used for business, or absent beyond the 6-year rule period. The 50% CGT discount then applies to the taxable gain if you held the asset for more than 12 months."},{"id":4,"question":"Does renting a room affect the exemption?","answer":"Renting a room on an ongoing basis (not through Airbnb occasionally) can affect the exemption. The ATO may treat the rented room as a non-exempt portion of the property, proportional to the floor area rented relative to the total floor area."},{"id":5,"question":"What about Airbnb?","answer":"Short-term Airbnb rentals can affect the main residence exemption. The ATO has confirmed that renting your home on short-stay platforms constitutes income-producing use. The taxable portion depends on how many days the property was listed and rented relative to your total ownership period."},{"id":6,"question":"Can I claim the exemption if I never lived in the property?","answer":"No. The property must have been your main residence at some point during your ownership. You cannot nominate a property as your main residence if you never genuinely lived there. The ATO looks at where you actually resided — not where you nominate on paper."},{"id":7,"question":"What records do I need?","answer":"Keep evidence of the dates you moved in and out, any rental agreements and income records, utility bills and bank statements showing your address, records of any home office claims, and invoices for capital improvements (these increase your cost base). Keep all records for at least 5 years after disposal, and longer where CGT calculations span multiple years or involve market value resets."},{"id":8,"question":"Does the exemption apply to properties held in a company or trust?","answer":"Companies cannot access the main residence exemption — the full gain is taxable. Trusts have limited access under strict conditions — certain types of trusts (such as some fixed trusts) may be eligible, but discretionary trusts and unit trusts generally cannot claim the exemption. Get professional advice before assuming a trust structure is covered."}],"sources":[{"title":"ATO — Main residence exemption","url":"https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/property-and-capital-gains-tax/your-main-residence-home/main-residence-exemption"},{"title":"ATO — 6-year absence rule","url":"https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/property-and-capital-gains-tax/your-main-residence-home/treating-former-home-as-main-residence"}],"products":{"tier1":{"name":"Your Main Residence CGT Fix Plan","price":67,"currency":"AUD","description":"Is your tax-free home actually taxable?","url":"https://taxchecknow.com/au/check/cgt-main-residence-trap/success/assess"},"tier2":{"name":"Your CGT Minimisation System","price":147,"currency":"AUD","description":"Minimise CGT with the right timing, structure, and documentation","url":"https://taxchecknow.com/au/check/cgt-main-residence-trap/success/plan"}},"monitor_urls":["https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/property-and-capital-gains-tax/your-main-residence-home/main-residence-exemption"],"canonical":"https://taxchecknow.com/au/check/cgt-main-residence-trap","api_endpoint":"/api/rules/cgt-main-residence-trap","generated_at":"2026-04-22T00:06:07.783Z"}