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Re: Does the Capital Gains Tax six-year exemption restart on my main residence now

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Hello. This concerns the Capital Gains Tax status of a current main residence I own.

I’m needing to know if the property qualifies for a restart of the six-year absence exemption for main-residence status.

I moved into the property, an apartment, in late 2013, and used it as the main residence until 2016.

I then rented it out on the corporate short-term market while living elsewhere until early 2020. A gap of about 3.5 years.

"Elsewhere" means either at a property rented by me, or later a second property owned by me..

I moved back into the apartment concerned in early June 2020. Aside from 11 weeks of short-term renting since then, I have used the apartment as the main residence.

Does this qualify for a restart of the six-year exemption, given my re-occupation since June 2020 totals more than six months? My AEC enrolment is at the address concerned, and I’ve always been the utilities bill-payer for it.

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Hi @Quay,

 

Yes.

 

The six-year absence exemption rule applies to each instance you genuinely live in the property as your main residence.

 

Remember though that there isn't one factor that determines a property as your main residence. We don't have a six-month live-in rule to say that's the length of time you need to stay before you can treat it as your main residence, but that's a good indicator to help decide.

 

You can read more about this on treating a dwelling as your main residence after you move out.

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Hi @Quay,

 

Yes.

 

The six-year absence exemption rule applies to each instance you genuinely live in the property as your main residence.

 

Remember though that there isn't one factor that determines a property as your main residence. We don't have a six-month live-in rule to say that's the length of time you need to stay before you can treat it as your main residence, but that's a good indicator to help decide.

 

You can read more about this on treating a dwelling as your main residence after you move out.

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Thank you and a belated follow-up question, please. 

Is the expiry of the six-year CGT main-residence exemption extended by each period that the property is either occupied by the owner or is not occupied by anyone else (not by a tenant, a relative, or friend. Just empty)? Thus if the six years began on January 1, 2021, with an expiry at that stage of December 31, 2026, and the property had been completely vacant for, say, three calendar months, and occupied by the owner for three other calendar months, out of eight months so far, then the six-year expiry would currently be June 30, 2027? That is, extended by six months, by occupancy of the owner or non-occupancy? And so on? Thanks.

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Hi @Quay 

 

Not quite. When you re-establish the property as your home where you live, the absence timeframes reset entirely. 

 

Keep in mind that the six-years applies to when the property is used to produce income. That means when it's rented out. 

 

If the property is not rented out, then it is exempt for as long as you hold it (as long as you don't have another main residence). 

 

In your example, assuming it's never rented out, the property is exempt indefinitely. This means you're resetting that indefinite time window every time you move back. 

 

If the property is tenanted, you'd reset the six-years rule every time you move back. 

 

Check out the example of Lisa and of Jez on our page for treating a former home as main residence on our website.