Renting Out Your Former Home? The CGT Valuation You’ll Need

Of all the capital gains tax questions that land on a valuer’s desk, this is the one that arrives too late more often than any other: “I rented out my old place years ago, sold it last month, and my accountant wants a valuation as at the day I first rented it. Can you still do that?”

We can. But it is always easier when the question comes first, not after the sale. Here is what is actually going on — and when you genuinely need that valuation.

What is the “home first used to produce income” rule?

The “home first used to produce income” rule is the capital gains tax rule that generally treats you as buying your former main residence at its market value the day it first earned income — when you rented it out or ran a business from home. That value becomes your cost base; only the growth after that date is potentially taxable.

Because nobody records that value at the time, establishing it later means a retrospective valuation — a market value reconstructed as at the specific day the property first earned income.

The rule, in plain terms

If a property was your main residence and you later start earning income from it — renting it out, or running a business from home — the tax law has a specific trigger. Under the “home first used to produce income” rule, you are generally treated as having bought the property at its market value on the date it first earned income. That figure becomes your cost base from that point on.

The practical effect: the gain that built up while you actually lived there drops out of the calculation. Only the growth after you started renting is potentially taxable. For most owners that is a meaningful reduction — but it only holds up if you can put a defensible number on the value at that date.

When you don’t need it: the six-year rule

Not every former home triggers CGT. There is a well-known concession — often called the six-year rule — that lets you keep treating a dwelling as your main residence for up to six years after you move out, provided it is producing income and you are not claiming another property as your main residence at the same time.

So: move out, rent it, sell within six years, claim no other main residence, and there is often no CGT at all — no valuation needed. Step outside that window (absent more than six years, or you have nominated another home) and a partial CGT liability appears. That is when the market value at the first-rented date starts doing real work.

The arithmetic gets fiddly fast, which is why we usually point people to the CGT valuation page and the CGT calculator to see how the cost base feeds the result before they commit to anything.

Why “as at the date” is the trap

Here is the part people underestimate. You cannot use today’s market value, or last year’s. You need the value as it stood on the specific day the property first earned income. That is a retrospective valuation: we reconstruct the market as it was on that date, using comparable sales from that period, not from now.

It is entirely doable — we do these regularly. But the further back the date, the more we lean on archived sales evidence, and the more it matters that the date itself is pinned down (first rent received, or first advertised for lease). Where the date sits in the cycle matters too. A Sydney apartment first rented near the 2021 peak, a Perth or Brisbane house caught in the recent run-up, a steady inner-Canberra street — each tells a very different story between that date and the sale, and the date precision changes the number.

What to do — ideally before you sell

• Pin the date. Find when income first started: the first rent received, or the day you first advertised it for lease. That is your valuation date.
• Get the valuation while the trail is warm. You can commission a retrospective valuation years later, but the closer to the event, the cleaner the evidence and the stronger the figure stands up.
• Check the six-year rule first. If you sold within six years and claimed no other main residence, you may not need a valuation at all — confirm with your accountant before paying for one.
• Keep it on file. A dated valuation is part of your permanent CGT record and supports the cost base for as long as you hold the property.

If you have moved out of a home and started renting it, the most useful thing you can do is get the date and a market valuation sorted now, rather than scrambling after a sale. You can request a quote for a retrospective valuation tied to your first-rented date, and our guide to retrospective cost-base valuations walks through the other dates that can matter.

Frequently asked questions

Do I need a valuation when I rent out my former home?

Not always. If you sell within the six-year rule window — you moved out, rented the property, sold within six years, and claimed no other main residence — there is often no CGT and no valuation needed. Step outside that window and a partial CGT liability appears; that is when you need a market value as at the date the property first earned income.

What date does the CGT valuation use?

The value must be as it stood on the specific day the property first earned income — not today’s value, and not last year’s. That means a retrospective valuation, reconstructing the market from comparable sales of that period. Pinning the date precisely (first rent received, or first advertised for lease) matters, because where it sits in the market cycle changes the number.

What is the six-year rule?

The six-year rule lets you keep treating a dwelling as your main residence for up to six years after you move out, provided it is producing income and you are not claiming another property as your main residence at the same time. Sell within that six-year window meeting those conditions and there is often no CGT at all.

Can I still get the valuation years after I first rented the property out?

Yes. You can commission a retrospective valuation years later — we do these regularly. The catch is evidence: the further back the date, the more we lean on archived sales records, so the closer to the event you get it done, the cleaner the evidence and the stronger the figure stands up.

How does renting out a former home reduce the taxable gain?

Under the home first used to produce income rule, the gain that built up while you actually lived there drops out of the calculation. Only the growth after you started renting is potentially taxable. For most owners that is a meaningful reduction — but it only holds up if you can put a defensible value on the first-rented date.

---

Sources

• ATO — Property and capital gains tax
• ATO — Your main residence (home)

Last verified 10 June 2026. This is general information, not tax advice; confirm how the rules apply to your situation with your accountant or the ATO.

See also

• Foreign Residents and CGT on Australian Property: Where the Valuation Comes In — the CGT treatment differs for foreign residents renting out a former home