Balancing Two Homes For Tax Benefits


Capital Gains Tax (CGT) can be a maze of rules and exceptions, especially when claiming exemptions for main residences. In this blog post, we’ll unravel the intricacies of CGT exemptions, exploring scenarios where individuals might find themselves juggling two main residences and the exceptions that come into play.

The Six-Month Overlap:

One common scenario is when an individual purchases a new home before selling the old one. In such cases, both homes can be entitled to the main residence exemption for an “overlap” period of up to six months. This provides a buffer for the homeowner to transition between properties. However, if the original home takes longer than six months to sell, a partial exemption will apply to one of the homes during the excess period.

Navigating the Exceptions:

While this six-month overlap rule offers flexibility, it comes with conditions. Homeowners must meet specific criteria to utilise this concession, making professional advice crucial in ensuring compliance. Legal interests in each property, the use of CGT concessions, and even the nature of the relationship between parties can influence the application of these exemptions.

Spousal Scenarios:

Another intricate area involves spouses having different main residences simultaneously. This can occur when work commitments or personal preferences lead to one spouse residing in a city apartment while the other enjoys a country or coastal home. Even in cases where a couple starts living together while one retains an existing property for rental purposes, special rules come into play.

The Spousal Dilemma:

A unique set of choices emerges when spouses have different main residences. The spouses must decide whether to designate one home as the CGT-exempt main residence for both during a specific period or each choose their respective homes as main residences. Opting for the latter means each spouse will likely only receive a half exemption on the chosen property during the overlap period.

Seeking Professional Guidance:

Given the complexity of these rules and the myriad factors influencing their application, seeking professional advice becomes paramount. Tax advisers can help individuals and couples navigate the legal interests in each property, leverage CGT concessions effectively, and determine the most advantageous approach based on their specific circumstances.


Understanding and navigating CGT exemptions for main residences involves careful consideration of rules, exceptions, and individual circumstances. Professional advice is indispensable when dealing with a six-month overlap or spousal scenarios. By unravelling the complexities of CGT exemptions, individuals can make informed decisions to optimise their tax positions and ensure compliance with the ever-evolving tax landscape.