6-Year Rule: What It Means for Property Owners and Tax Benefits

When you sell a home you used to live in, the 6-year rule, a tax provision that lets you treat a former primary residence as your main home for up to six years after moving out. This rule is especially useful if you rented out your house after moving, or moved for work and couldn’t sell right away. It doesn’t apply to every property—only the one you lived in as your main home before renting or leaving it vacant. Many people don’t realize they might still qualify for a full or partial capital gains tax exemption, even if they haven’t lived in the house for years.

The capital gains tax, the tax you pay on profit from selling an asset like real estate can hit hard if you’re not prepared. But if you meet the 6-year rule conditions, you could owe $0 in tax on gains up to $250,000 (or $500,000 for married couples). The clock starts when you move out, not when you buy. You can rent it out, leave it empty, or even use it as a vacation home during those six years—and still qualify. But if you claim another home as your primary residence during that time, you lose the exemption. There’s no reset unless you move back in and live there for at least two years again.

People often mix up the 6-year rule with the primary residence, the home where you live most of the year and use for mail, voting, and taxes requirement. You don’t need to live in the home forever. You just need to have lived in it for at least two of the last five years before selling. That two-year window can happen anytime in those five years—it doesn’t have to be right before you sell. The 6-year rule extends that benefit beyond the five-year limit, giving you breathing room if the market is slow or you need to relocate.

What trips people up? Thinking the rule applies to investment properties. It doesn’t. If you never lived in the house, the 6-year rule won’t help. Also, if you’ve used this exemption for another home in the last two years, you’re locked out. And if you claimed depreciation on the property while renting it out, you’ll still owe tax on that portion—even if the rest is exempt.

You’ll find posts here that dig into real cases: how someone in Virginia avoided $80,000 in taxes by timing their sale just right, or why a couple in New Zealand kept their old home for six years after moving abroad—and still got the full exemption. Others show what happens when people misread the rules and end up with surprise bills. There are also guides on how to prove your home was your primary residence, what documents to keep, and how to handle partial exemptions if you moved out before the two-year mark.

Whether you’re planning to move, rent out your place, or just sold your home and got a tax notice, the 6-year rule could be your best friend—or your biggest mistake if ignored. The posts below give you the facts, the loopholes, and the real-life examples that actually matter.