On-Selling (flipping?) before settlement

[timwr]

Hi folks,m

I have an opportunity to put a deposit bond on a block of land with 6 months until settlement. I know the area has got excellent growth and so I could be looking to sell it before settlement, although i know I'll lose my CGT discount. I know this can be done but I don't know exactly how.

Can I list the property for sale with an agent prior to settlement?
Do I need to get a conveyancer to do the searches etc. if I don't intend to settle?
Can anyone advise?

Thanks

Tim

 

[XBenX]

do some searches on lease options - i know nothing about it other than what ive read....

perhaps someone who has done a lease option can provide details ?

 

[agent007]

Hey Tim, try to post this question in Innovative Techniques. That could be a better place for this.
Good luck,
James.

 

[Sim]

agent007... I've already moved it to Innovative Techniques

 

[jassep]

Hi Timwr,

I'm not sure about the laws in QLD, so you may need to check it out with a solicitor, but you may be able to use "...and/or nominee" after your name on the contract in order to assign it to another purchaser before settlement. Apparently there can be double stamp duty traps with this (ie. you AND your purchaser paying stamp duty, even though it is "technically" 1 transaction), so check it out first.

Another way to go about it is to use an Option contract. That is, secure the "right" to purchase the land (but not the obligation) and then make sure the option is assignable. You may be able to pay as much as you were going to pay for the deposit bond as the option consideration. I believe the duty laws are much more flexible when it comes to options, but again, check it out first.

Hope that helps...

 

[asy]

Originally posted by timwr
I have an opportunity to put a deposit bond on a block of land with 6 months until settlement. I know the area has got excellent growth and so I could be looking to sell it before settlement, although i know I'll lose my CGT discount. I know this can be done but I don't know exactly how.

Can I list the property for sale with an agent prior to settlement?
Do I need to get a conveyancer to do the searches etc. if I don't intend to settle?

Yes, you can list a property with an agent prior to settlement, as long as the property is unconditional.

I would strongly recommend that you do all things as if you were going to settle, searches, and finance, etc... Some times these things unravel and you DO end up settling. If you are going to embark on this please ensure that you have the ability to settle.

Be careful with and/or nominee clauses in QLD,there are additional stamp duty ramifications, please check with your solicitor.

The things you need to be aware of are that you may be liable for stamp duty on your purchase, you may be liable for 2 lots of solicitor fees (the settlement and the sale), and as you said, the CGT.

This can be done, I did it a couple of years ago, I Contracted on the block prior to the plan approval, with a 6 month settlement. Settlement was delayed due to the road not being through yet...
But we had it on the market the day after it went unconditional.

By the time settlement came we already had another purchaser unconditional on our contract, for a tidy profit of 25k.

hope this helps,

asy