With house prices falling in some major capital cities, you may be looking to buy a home – either as a first home buyer or otherwise.

In this case, there are a few important Capital Gains Tax (CGT) matters to take into consideration.

Firstly, there is the rule that a home will only qualify for the full CGT main residence exemption if it was your home throughout your “ownership period” – essentially, being from settlement date on purchase to settlement date on sale.

However, there is an important concession to help you here.

If it somehow proves “impracticable” to move in at settlement, then the full exemption will still apply if you move in as soon as it is “reasonable” or “practicable” to do so.

But a word of warning here: this concession applies narrowly.

It does not apply where it is “inconvenient” to move in as soon as possible after settlement. It must be a “compelling” reason – and this does not include, for example, where the purchased property is still being leased to a tenant.

And note that when this concession was introduced, the government stated that it would only cover the case of “serious illness” and similar such matters.

Secondly, if you already own a home and you end up purchasing your new home before selling your old one, then there is a concession that allows you to treat both of the homes as your “CGT exempt home” for up to a 6 month overlap period.

However, there are important conditions that must be met for this concession to apply – including that your existing home must have been your main residence for at least 3 months in the 12 months before you end up selling it.

These conditions can be quite “tricky” to apply and will depend on your exact circumstances.

Thirdly, if for whatever reason, you decide to rent the new home first before you make it your home there are several important things to bear in mind.

For a start, you will lose the CGT exemption on your home on a proportionate basis to the extent you rent it first up. (But if you rent it after making it your home on a “bona-fide” basis then there is another concession that allows you to keep the exemption in this case).

Importantly, if you bought the property after 12 May 2026 and you rent it out after 30 June 2027, negative gearing is not available. However, this is subject to an exception if you bought a “new residential dwelling”.

Finally, if you are liable for any CGT on your home because you have only a “partial CGT exemption”, then regardless of when you bought the property, any capital gain that relates to the period after 1 July 2027 will generally be subject to the new “indexation” calculation rules. And this generally does not give you as big an advantage as the former 50% discount.

So, if you are thinking of buying a new home – or a first one – it is worth making an appointment with us to discuss these matters.