Early Settlement and rent back to vendor: Pros and Cons

Hi everyone,

House is due to settle late next month but vendor's solicitor has been in contact to request an earlier settlement and a rent back of 1-2 months. They are wanting to have extra time to find another house.
2 months is out of the question so will rent only for an additional month.



What are the pros and cons of renting back to vendor? What contract should I have and when would an inspection follow? What should I be careful of?
I know I am not obliged to so may just not offer this extension (this is a PPOR so moving in)

Would there be tax issues with renting back after settlement for 1-2 months? This will be a PPOR so would not like to pay capital gains once we sell the house in the future.

Also I know market rent is say $350 a week but holding cost for the house is $2200 a month. Would it be fair to charge them the $2200.

Any other experience would be appreciated. Thanks in advance

 

Why not grant the extension for selltement but reduce the price by an agreed amount, at least $1,500 per month but I would go even higher to compensate you for the inconvenience..

No CGT issues. Slightly less S/D. No PM activity.

 

consider the residential leases act in the state - minimum lease 6 months so you might want to consider a licence to occupy.

Do a very thorough inspection otherwise how will you know whether damage was cause after settlement - or exchange of contracts actually.

Seek legal advice.

 

Might end up in a similar position on a property in Qld - we (buyer) would prefer an extended settlement however more likely that the seller would accept a rent back for a 4-5 month period. How would this affect stamp duty? If the tenancy was already in place and we moved in within 6 month we would only be paying PPOR stamp duty, however not sure how the rent back as a contact condition would affect this?

 

Hi,
I know this is an old thread, but I am now in this situation of vendor wanting to rent back the property we have bought as our PPOR.
Just wondering how this went for you in the end? Were there tax implications?

 

The tax implication will be that you have not moved into the house as soon as possible after settlement, so some part (based on number of days rented divided by number of days owned) will be exposed to capital gains for ever which you might be able to reduce by keeping records forever of nondeductible expenditure on your home. Unless you were not going to move in as soon as possible after settlement personally I wouldn't agree