Can settlement be any length of time?

I'm just wondering if settlement can be any length of time (obviously as long as it's agreed to) or if there are any legal requirements stating it must be under X amount of days? When people talk about long settlement I'm guessing they mean anything more than standard 4-6 weeks. What's the longest settlement you've had?
 
Longest settlement we had was 4 months on a resi - although it was written into the contract that it could be bought forward if both parties agreed.

In the end it was bought forward as our house sold quickly ... but it was nice to know we had the four months if required.
 
I think there are CGT implications if settlement is beyond 12 months....normally you incur CGT when you sell the property, but only pay it once settlement occurs. If settlement is further than 12 months out, then I think you have to pay the CGT even before you settle.
 
Absolutely, as others have said, settlement can be however long the buyer and the vendor agree upon. Don't let the real estate agent convince you otherwise, as they naturally want a quicker settlement because it means they get paid sooner. All depends on the situation of the vendor and the buyer combined. long settlement can suit some, whilst not others.
 
I think there are CGT implications if settlement is beyond 12 months....normally you incur CGT when you sell the property, but only pay it once settlement occurs. If settlement is further than 12 months out, then I think you have to pay the CGT even before you settle.

are you sure you arent confused with stamp duty? i know as a purchaser in WA you have to pay stamp duty within 12 months of contract being signed irrespective of settlement, many people buying OTP have been caught out by this
 
are you sure you arent confused with stamp duty? i know as a purchaser in WA you have to pay stamp duty within 12 months of contract being signed irrespective of settlement, many people buying OTP have been caught out by this

I settled one last year with a 16 month settlement and never paid CGT.
 
forgot I settled one three years ago, it was a 20 year settlement agreement with vendor finance, payment with installments, but vendor agreed to release mortgage for early repayment after 15 years.
 
CGT, if payable, would be based on contract dates, not settlement.

My understanding is that if you sold a property on 30 June 2010 and settled on 1 July 2012,(ie 2 year settlement) then CGT would be payable in the 2010 financial year even though you may not receive the funds for 2 years. I am not sure if there are other provisions to delay the payment of the tax or not.

If it was a installment contract then you may be able to treat the tax differently though.
 
CGT, if payable, would be based on contract dates, not settlement.

My understanding is that if you sold a property on 30 June 2010 and settled on 1 July 2012,(ie 2 year settlement) then CGT would be payable in the 2010 financial year even though you may not receive the funds for 2 years. I am not sure if there are other provisions to delay the payment of the tax or not.

If it was a installment contract then you may be able to treat the tax differently though.

That sounds like my understanding too Terry.
 
ah ok thanks for that, makes sense. i know cgt is calculated on contract dates, just didnt consider that it would have to be paid that yr.
 
ah ok thanks for that, makes sense. i know cgt is calculated on contract dates, just didnt consider that it would have to be paid that yr.

In Victoria these days we have to pay our stamp duty at settlement if a mortgage is involved, or within 30 days without.
 
Just for clarification, the ATO at http://www.ato.gov.au/content/54986.htm mentions:

"Is the contract date or settlement date relevant for determining whether, for CGT purposes, I have purchased or sold a property?

Your client will be taken to have acquired or disposed of their property for CGT purposes when they enter into a contract to purchase or sell it. In some States this is the time when contracts are exchanged, in others it is the time when both parties sign the contract.

If your client is selling a property this means that they should include their capital gain or loss in their income tax return for the income year in which they enter into the contract - not the income year in which the settlement takes place. However, your client is not required to do to this until an actual change of ownership of the property happens (at settlement). If your client already has an income tax assessment for the year in which the contract was entered into, they may need to have that assessment amended."


Also, ATO ID 2004/407 confirms what Terry mentioned about Instalment Contracts and this issue. It's at http://law.ato.gov.au/atolaw/view.htm?docid=AID/AID2004407/00001

A bit of light reading for you ;-)

Cheers, Paul
 
My first property was meant to be 1 month settlement but got dragged out to 3 months (mainly because I had no idea what I was doing).

Lucky the agent was understanding and helpful (and more importantly there were no other offers.)

So I started negotiating in April, signed contract in early May (pending finance etc...) and settled in late August.

If I had my time again I would've dragged settlement even further so as to give me more time to look for better deals.
 
CGT, if payable, would be based on contract dates, not settlement.

My understanding is that if you sold a property on 30 June 2010 and settled on 1 July 2012,(ie 2 year settlement) then CGT would be payable in the 2010 financial year even though you may not receive the funds for 2 years. I am not sure if there are other provisions to delay the payment of the tax or not.

If it was a installment contract then you may be able to treat the tax differently though.


yup that is correct - happenned to me once. the contract date is what they go by. however - if the sale didn't go through, you can ask for an admendment.
 
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