CGT buying a new home before selling the old one

If you buy a new home before selling your existing one, important capital gains tax (CGT) issues can arise. Under the CGT rules, you generally cannot have two CGT‑exempt main residences at the same time.

However, there is an important concession that allows you to treat both the new home and the existing home as CGT‑exempt for up to six months, provided the new home becomes your main residence.

For example, if you purchase your new home on 1 February 2026 and sell your existing home on 1 July 2026, the CGT main residence exemption can apply to both homes for that five‑month overlap period.

Conditions to Access the Concession

The six‑month CGT overlap concession is subject to strict conditions.

First, the existing home must have been your main residence for at least three months in the 12 months before sale.
Second, it must not have been used to produce assessable income in any part of that 12‑month period when you were not living in it.

If these conditions are met, you may be able to claim a full CGT exemption on both homes during the overlap period.

The Australian Taxation Office outlines these requirements in detail in its guidance on moving between main residences (ATO – Moving to a new main residence).

Renting the Existing Home

If you rent out your existing home before selling it, the six‑month overlap concession may not be available.

For example, if you rented your existing home during the five months before sale, the dwelling would generally not qualify as a main residence during that period. As a result, a partial CGT liability may arise.

If it was the first time the property was rented and it was fully CGT‑exempt immediately beforehand, the capital gain is typically calculated using the market value at the time it was first rented, rather than the original purchase price.

This interaction can significantly affect the CGT outcome and requires careful analysis.

Other Relevant Concessions

In some cases, other CGT concessions may help manage the outcome.

The absence concession can allow you to continue treating your existing home as your main residence even while it is rented, subject to specific rules.

Similarly, the building concession may allow land acquired to build a new home to be treated as your main residence for CGT purposes during construction.

However, the interaction between these concessions and the six‑month overlap rule can be complex, and outcomes depend heavily on the specific facts of each case.

Get Advice Early

If you have bought a new home before selling your existing one—or are planning to do so—it is important to obtain tailored advice.

CGT outcomes can vary significantly depending on timing, property use, and eligibility for concessions. Professional advice can help ensure the rules are applied correctly and in the most tax‑effective way for your circumstances. (CGT – Buying a new home before selling the old)

WL Advisory is a Chartered Accounting firm. We specialise in accounting, tax, and advisory services for individuals and small businesses. Please visit our website to book an obligation-free appointment.