Capital Gains Tax 6 year rule and two main residences

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(Initiate)Initiate

15 Nov 2023

I'm hoping I can get some advice on whether CGT applies to me or whether the 6-year rule will apply and mean I don't need to pay CGT. The facts are (dates are approximate but the months are close to correct):

I purchased a property on 4 February 2021 and lived in it until 1 May 2022.
I then moved out and rented a separate property to live in from 1 May 2022 until 28 April 2023.
I rented the purchased property to a tenant from 9 May 2022 and sold that property on 8 August 2023 (made a gain on purchase price) - the tenancy ceased then.
I purchased a house with my partner on 1 April 2023 (contract signed around then) to live in and moved in 1 May 2023.

Appreciate I will need to discuss this further with my accountant, however, hoping to hear whether I am interpreting the 6-year rule correctly and CGT may not apply?

Many thanks

Andy

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Taxduck

(Taxicorn)Taxicorn

15 Nov 2023

You can use the 6 year rule on the sale of your rental property. As long as it's on less than 2 hectares it can be considered your main residence until sold (contract date) and you can apply the main residence exemption. CGT will not apply.

You can only have one main residence at a time, so the second property that you have a half share ownership of will be subject to CGT for the period from 1 April 23 to sold date (contract date) of rental (maybe August 8, or earlier?). Only looking at about 4 months and won't be a concern unless property is sold. Keep records of purchase price and purchase costs plus holding costs for those 4 months.