Settlement date is the day when a property purchase is officially completed. It is the date when the buyer pays the remaining balance of the purchase price, the seller hands over the title, and legal ownership of the property transfers. Until settlement, the buyer has a contract to purchase but does not yet own the property.
Settlement typically occurs four to six weeks after contracts are exchanged, though the exact timeframe is negotiated between the buyer and seller and written into the contract of sale.
What Happens on Settlement Day
The settlement process involves the buyer's and seller's legal representatives (solicitors or conveyancers) and their respective lenders. On the day:
- The buyer's lender releases the loan funds
- The buyer pays the balance of the purchase price (loan funds plus any remaining deposit)
- The seller's mortgage is discharged (if applicable)
- The title is transferred to the buyer
- The keys are handed over
In practice, most of this happens electronically. The buyer's solicitor confirms that all conditions have been met, and the financial transactions are processed through an electronic settlement system.
Why the Date Matters for Tax
For capital gains tax purposes, the ATO considers the sale to occur on the date contracts are exchanged, not the settlement date. But for other purposes, such as when you can start claiming property expenses, when rental income responsibility shifts, and when land tax liability transfers, the settlement date is the key date.
If you are buying an investment property with an existing tenant, you will start receiving rent (and responsibility for expenses) from the settlement date.
Adjustments at Settlement
On settlement, certain costs are adjusted between buyer and seller based on the settlement date. Council rates, water rates, strata levies, and any prepaid rent are apportioned so that each party pays only for the period they own the property.
Why It Matters for Landlords
Settlement date is when your ownership, and your obligations, begin. From that date, you are responsible for the property, its tenants, its maintenance, and its costs. If you are buying a tenanted property, make sure you have all the lease details, bond information, and tenant contact details ready for a smooth handover. Our first investment property checklist covers what to prepare.
propkt lets you record your property's settlement date and start tracking income and expenses from day one of ownership.