Do I pay CGT on my investment property if I lived in it first?

Australia's main residence exemption (ITAA 1997 s118-110) means selling your home tax-free, no CGT applies. The trick is that if you move out and rent the property out, the exemption can extend for up to 6 years under the 'absence rule' (s118-145), provided you don't claim another property as your main residence during that period.

If you lived in the property as your main residence, then moved out and rented it, then sold within 6 years of moving out, the gain remains fully CGT-exempt. The 6-year clock resets each time you move back in, even briefly, then move out again, though the ATO scrutinises this so make sure occupation is genuine.

If you sell more than 6 years after moving out, CGT applies on a pro-rated basis using the ratio of non-main-residence days to total ownership days. The 50% CGT discount for assets held >12 months still applies. Depreciation claimed during the rental period adds to the cost base on the ATO's depreciation recapture rules.

If the property was an investment from day one (you never lived in it), no main residence exemption applies and CGT runs the standard schedule from purchase to sale. The 6-year rule and the 50% discount are independent. The discount applies regardless.