Multi Scenario Question - requires cracking solution

Hi

So here goes.

I have a tenanted rental property I plan to sell and settle before the end of this year.
A. As a require the funds for another project in the new year.
B. To ensure I settle before 31st December and not past this date / avoiding activating Land tax for 2018.

Close Family are very interested in purchasing this property for themselves from me.
- Developers have been beginning to snap up properties where they currently live, and interest is imminent - (0-12 months) for their current property.
- But they may not be in a position to have sold and settled their property before the end of this year.

So what are the options....
- Family negotiate a pre sale deal with interested developed to provide funds in advance based on sale of their property to developer by X date in the nxt 12-24 months....
- Family speed up their selling process by means of normal sale or auction with real estate agent in the next few months....
- Family (retired) - obtain a loan... from bank to provide funds for purchase of my property, pay back the loan to the bank on eventual settlement of their current PPOR.


What other options have i not considered, or are the above options pretty much it / or even feasable....

 

Best option for you may be to sell on the open market.
Marg

 

An option for sale
A sale on market
Timing
Risks of a conditional sale
Costs of selling
Income tax
CGT
Risks of sale not occurring
CGT event timing
Legal costs to secure risks
and.................

 

So you want to settle before Dec to get the cash and avoid land tax?

The purchaser will have to come up with the cash to do this. They would need to borrow if they haven't got it.

If you had the cash you could lend them, but sounds like you need it even if you had it.

 

Gday Terry

Yep - I'll need the cash,

so bank shouldnt have problem loaning the money for such a purpose to a retired couple, they have more than enough equity in the PPOR

 

The bank will need to make sure they have enough income to service the loan.

 

Three questions - given it is close family:

1. What is in it for them? (e.g. Cheaper due to no agent commission)
2. What is in it for you? (e.g. Altruistic)
3. Why is this better for each of you then selling/purchasing independently?

 

No agents commission or furniture staging costs is a bonus for them.
Not many new (1 yr old) single storey homes in the area, that would otherwise perfectly fit our downsizing needs.
Helping each other out is a win win for both parties, keeps the property in the family, it's just being happy on an agreed price with the unknown of what an auction may bring...price wise

 

@Keentolearn77 - To reduce what you perceive as a major cost to yourself, have the landtax liability fully adjustable on settlement (OK it doesn't avoid the situation but gets the burden off your shoulders and acts as an encouragement to settle pre-2018).

How much land tax are you talking (it's deductible for you).

The sale of their property will most likely be on option so their settlement won't be when you want them to settle, even if it is, they'll be liable for land tax on one or the other properties.

It may be better for them to purchase on market elsewhere to avoid anyone paying land tax and them having the certainty of how much they will receive for their site.

Your generosity may not be so generous to them after all (a small saving of land tax for you is not going to be much in the scheme of things).

 

Current owners land tax is just into the next 'combined properties values' bracket by a few thousand dollars = which means a crazy extra $6-7000 in land tax.
Selling settling b4 31st will put current owners into a lower bracket for combined values of IP and subsequently - lower land tax bill
New owner would be 1st IP = lowest bracket and only a few or more hundred dollars land tax for them.