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Ilovedogs96(I'm new)I'm new
19 Feb 2026

Hi,


I am wondering whether I have to declare an insurance payout for a property that was used as a rental however I am now living in it. I am also not sure whether it would be considered capital works or repairs if it needs to be claimed.

Please see all the details below as there is more to this than purely a rental property and basic repair:

- House is under a PPOR CGT exemption, it was first rented out in 2023 while I was away for work and now have returned to the house February 2026.

- In October 2025, the house was damaged during a storm where I have had the entire carport lifted and taken away due to strong winds, and severe hail damage to the roof requiring an entire roof replacement. The damage is beyond repair and the only option is an entire roof replacement.

- I have moved back into the property in February 2026.

- The insurance has not been finalised and I am expecting a payout of approximately $60k in March 2026.

- Once payout is received I will be replacing the carport and house roof at a like for like replacement, with no improvements to any structures (ie. same quality of material, same specifications etc.) for a cost of around $60k

- I will continue to live in the house as my main residence, not purely for the duration of repairs.

- The insurance payout is under my landlords insurance and is for repairs only, it does not include loss of rent. I must keep this insurance policy until the claim is complete.


Is this instance is the insurance payout:

1- not income and falls under main residence,

2- income and the repairs are immediately deductible,

3- income and the repairs are considered capital works and need to be claimed over a period of time, or

4- this is a CGT event?


The insurance company cannot repair the damage for quite a few month, whereas a local small business is able to do this alot sooner however I do not want to incur a huge tax bill.


I have called the ATO and they advised this is not income, however I am still worried.


I have checked alot of ATO sites and I cannot find an answer.

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175 views
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Ilovedogs96(I'm new)I'm new
19 Feb 2026

I thought I would add that the ATO advised that because the payment will be made while I am living in the house this is why it is not income, it is back being my PPOR. And likewise because it is my PPOR I cannot make any deductions related to these costs.


I am quite stressed about accepting an insurance payout and am starting to second guess any advice I have been given (noting it was by the ATO yesterday) that is why I am posting 😅

KaraATO(Community Support)Community Support
20 Feb 2026

Hi @Ilovedogs96,


From what you’ve said, I think you mean the 6‑year rule. This rule can let you keep treating your home as your main residence for CGT purposes, even if you rented it out for a period of time (as long as you meet eligibility). If the 6‑year rule applies to you, then your home can still be your PPOR for tax purposes.


Generally, insurance payout for damage to your main residence (family home) isn't taxable and you don’t need to put it in your tax return.


If a property wasn’t your PPOR at the time of the payout for example, it was being rented, the tax rules may change. Insurance payouts for rental properties are usually counted as income and need to be included in your tax return.


Because we can’t give a legally binding answer here, it’s best to reach out to our tailored technical advice team or apply for a private ruling.


They can look at your full situation and give you clear, legally binding advice. If you already have written advice from us, you can rely on that.


You can also speak with a registered tax agent if you want more help.

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