I tried to look it up on the ATO website for you but could not find it. I will give you my layman's understanding and you can confirm it with a tax professional.
The answer is yes. If you are renting a house but have an investment property (let's say you have several) then you have all the negative gearing benefits etc that a live-in-their-own-home-owner has on their investment properties PLUS you can nominate one of the investment properties to be your PPOR (principal place of residence) for Capital Gains Tax purposes.
However, unlike the live-in-their-own-home-owner who is CGT free on his PPOR in perpetuity (as long as he lives there) you only get a 6 year CGT free period.
The reason this was introduced was military staff. Military staff complained that they were being moved all the time and were living in rented accomodation and therefore could not get the CGT free benefit that the rest of the popluation has on their own home.
The government said, OK you can take one of your investment properties and be CGT free on that one but only for 6 years, all growth after that is subject to CGT.
Once that was enacted other parts of the community said "hey what about me" and so it became available to all.
How it is valued etc are specifics I don't have and therefore you need to get a tax professional. I believe MilesG is a tax professional, maybe he can help.
