I'm often receiving contact from buyers of properties which are intended to become the taxpayers PPOR however they have given the former owners a right to rent for a short period of time. They ask if the main residence may have a CGT issue for that period. And in some cases they seek to rely on the "as soon as practicable rule" Three enquiries this week alone means its time to review this issue. Is the property subject to CGT for the period rented. Yes Can the PPOR exemption be used ? Not for the period it was rented. s118-135 of ITAA97 uses the term "as soon as practicable" to the main residence exemption. Does this mean I can apply this rule to the period rented. After all, I cant move into my new PPOR until the short rental period has passed. That is as soon as practicable as far as I'm concerned. No. The ATO have an Interpretative Decision (ID 2001/744) about this issue. The ATO rely on the explanatory memorandum which explains the intended meaning of proposed tax law to the MPs and Senators at the time the Bill was presented to Parliament. The EM clearly indicates that waiting for a occupancy under a lease or other impediment such as a tenant who wont vacate from a lease is not sufficient reason to claim the main residence test is satisfied using the as soon as practicable rule. In these examples the total capital gain must be pro-rata'd between the taxable number of days (rented) and the exempt days (main residence).