Hello all,
I have been an avid reader of this forum for some time now and have found the questions, answers and opinions provided by others to to be of great value.
I have recently put in an offer on an investment property and I require some insight regarding (a) why a vendor would request a settlement date for the new financial year (It is an investment property of the vendor and I can only guess that it has something to with a tax strategy); and (b) what are the risk for me if I choose to proceed with the offer; and (c) are there any recommendations to any additional clauses that I should get inserted into the sale contract to protect myself down the track?
Thoughts and comments greatly appreciated.
A delayed settlement can be used to ensure that the vendor is able to provide vacant possession (ie will hand over once lease expires).
It might be done under the mistaken belief of cgt relief as cgt runs on contract date not date of settlement (might need to confirm this).
If it wasn't an ip, then it may just suit the vendor to settle in the new financial year (might be constructing new house, didn't want to move before/after a certain event eg birthday/anniversary/visitors etc).
Thanks for the insight SNM. Turns out that settlement in the new financial year suits the vendor more.
Look at it as a good thing- You buy at today's contract price, but don't have to pay holding costs for six months.
And you're half way to the 50% CGT discount as well
Just on the finance side of things, you need to be aware a lot of lenders won't unconditionally approve a loan this far out as their maximum period is 90 days.
Cheers
Tom
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