Selling an investment property: legal and tax preparation

Prepare before marketing

In NSW, the contract for sale generally needs to be prepared before a residential property is offered for sale. The vendor should provide title details, loan information, tenancy documents and details of alterations, disputes or notices early so the contract can be assembled accurately.

Tenancy and possession

A sale with a tenant requires attention to the lease, bond, rent adjustments, notices and whether the contract promises vacant possession. A vendor should not assume a tenancy can be ended merely because a sale is planned. The legal position and timing depend on the tenancy and applicable legislation.

Loan discharge and settlement

The outgoing lender’s discharge process should start promptly. Delays in identification, forms or lender processing can threaten settlement even where the purchaser is ready. The vendor should also verify payment directions using a known telephone number because property transactions are a frequent target for payment redirection fraud.

Tax records

Potential capital gains tax makes record keeping important. Acquisition costs, stamp duty, legal fees, capital improvements and selling costs may affect the calculation, subject to the tax law and the owner’s circumstances.

Foreign-resident capital gains withholding rules can also affect settlement. Vendors should determine well before settlement whether a clearance certificate or other action is required.