I just exchanged on a property out west of Sydney. The buyer (an investor), insisted on 12 months before settlement. As much as I tried I can’t understand the logic behind this decision. The place is rented of which I receive the rent. My solicitor can’t understand why either. The prices are not moving upwards.
Is there something I’m missing?
Perhaps tax implications (CGT)? Or the investor might try to flip the property (that is reselling it). Or perhaps he wants time to buy and then refinance, Or perhaps they have to sell some other properties before they can buy yours (free up some equity), etc.
Of course there is nothing wrong with all the above (as many sellers want to keep living in the house for a while before they move and it gives them piece of mind that they have a buyer and of course time to buy a house they really want).
Hellman
I’m confused as well…which bit don’t you understand ??
The fact that the purchaser insisted on 12 months settlement or the fact that you agreed and signed off on it ??
What’s the point of asking the question “Am I missing something”…and then conferring with your solicitor after you’ve signed off on the contract ??
Me thinks it’s just a tad late for queries and ‘trying to understand’ for this deal. For future reference I can see the point, but the horse has bolted on this one Chrismaz.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
It wouldn’t be CGT reasons – this is based on the date of contract.
He is probably assuming the property will rise in value during this time.
Terryw
Discover Home Loans
North Sydney
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Perhaps he wishes to onsell it with a simultaneous settlement?
Cheers,
Simon Macks
Residential and Commercial Finance Broker
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0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Nothing confusing about it. Doing this means that the property, which being in Sydney is probably a NG prospect, is neutrally geared for them for 12 months. And the best bit is that you are financing it all for them. Hopefully you got a higher price to reflect what you are giving up, like about 5%.
To figure out why a 12 month settlement is good for an investor, have a think about an extreme example of say a 10 year settlement at the current market price. Would you have been prepared to go for that long a settlement? Why not?
I’m wondering if property prices move downwards in excess of his deposit, could he then withdraw from the contract?
Or if rents move upwards, could he settle prior to the 12months?
Why did you want such a long settlement Chrismaz?
You’ve probably copped a fair ear bashing already about this Chrismaz, but gees…..12 month settlement????? Talk about being railroaded! Wow, there sure is something missing in this situation. I hope youre able to swing it back in your favour.
Eric
Terry is correct CGT is based on the contract date and not the settlement date.
I assume that your buyer is not aware of something in Town Planning that you are not. The area is to be rezoned or has sub division potential etc etc.
Cheers Richard
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I agree. Could be a developer wanting to buy up a chunk (say properties next door) or who knows that zonings will be changed.
Megan
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