Property guide · NSW
Buy first or sell first? The legal side of buying and selling at the same time in NSW
Moving house means juggling two contracts, two settlements and often two loans. Here’s how each approach works in NSW, where the legal risks sit, and what to sort out before you sign either contract.
If you’re upsizing, downsizing or relocating, the order matters. Sell first and you might be left without a home. Buy first and you could be paying two mortgages. Try to do both at once and a delay on one contract can derail the other.
There’s no single right answer. It depends on your equity, your lender and how quickly property is moving in your area. But the legal side is the same whichever way you go: the two contracts need to work together, and that has to be built in before you sign.
Key takeaways
- There are three ways to do it: sell first, buy first, or line up both settlements for the same day.
- Whichever you choose, the settlement dates and conditions in both contracts need to fit together before you exchange on either.
- Stamp duty on your purchase is due at settlement or three months after the contract, whichever comes first, even if your sale hasn’t settled.
- For capital gains tax, both homes can usually be treated as your main residence for up to six months.
- Don’t let your buyer move in early, or agree to stay on after settlement, without a written agreement.
On this page
Three ways to do it
| Approach | How it works | Main risk | Usually needs |
|---|---|---|---|
| Sell first | Sell and settle your home, then buy | Prices move while you search, and you may need somewhere to live | A long settlement or a rent-back after settlement |
| Buy first | Buy your new home, then sell the old one | Holding two loans if your home takes longer to sell | Bridging finance or enough equity and income |
| Same-day settlement | Exchange on both, then settle both on the same day | A delay on one contract affects the other | Matching settlement dates and a back-up plan |
Your broker or lender will tell you which approaches you can afford. Your lawyer’s job is to make sure the contracts support whichever one you choose.
Selling first: protecting yourself
Selling first gives you certainty about how much you have to spend. The trade-off is timing. If you haven’t found your next home by settlement, you’ll need somewhere to go.
Ask for a longer settlement
The standard settlement period in NSW is about six weeks, but you can negotiate a longer one when you sell. Some buyers will agree to three months or more. Build it into the contract before it goes to market, or negotiate it with the buyer before exchange.
Staying on after settlement
If your buyer agrees, you can stay in the property for a short time after settlement. This needs a written agreement covering the rent or fee, how long you can stay, insurance, and what happens if you don’t leave on time. Don’t rely on a verbal arrangement through the agent.
Our guide to selling a house in NSW covers what needs to be ready before you list, including your ATO clearance certificate.
Buying first: what the contract needs to cover
Buying first means you don’t miss the right property. But once you exchange, you’re committed to settle whether or not your home has sold.
Bridging finance
A bridging loan covers the gap between buying and selling. You’ll usually pay interest on the combined debt while you own both properties, and the lender will expect your old home to sell within a set period. Get the terms in writing before you sign the purchase contract.
A ‘subject to sale’ condition
You can ask for your purchase to be conditional on selling your current home. In NSW sellers rarely agree, especially in a competitive market. If they do, the wording matters. Your lawyer should spell out the deadline and what happens if your sale doesn’t go ahead.
Don’t waive cooling-off lightly
If the seller asks for a 66W certificate, you lose your cooling-off period. When you’re also relying on a sale, that’s a bigger risk. Make sure your finance is confirmed first.
Stamp duty timing
Stamp duty is due by the earlier of settlement or three months after you sign the contract, according to Revenue NSW. If your purchase has a long settlement, duty can fall due before your sale settles, so budget for it. Our stamp duty guide explains how it’s calculated.
Lining up both settlements
Most people try to settle the sale and the purchase on the same day. In NSW both settlements are usually done electronically, and the sale settles first so its proceeds can go straight into the purchase.
It works well when everything runs on time. The risk is that one delay causes another. If your buyer can’t settle, you may not be able to settle your purchase either, and your seller can charge penalty interest and serve a notice to complete.
Ways to reduce the risk
- Set the purchase settlement a few days after the sale, not the same day
- Check both contracts allow for electronic settlement
- Ask whether the deposit you receive on your sale can be used towards your purchase deposit
- Consider a deposit bond for your purchase if your cash is tied up
- Have a back-up plan, such as short-term accommodation or bridging finance on standby
Early access and late exits
Sometimes your buyer wants to move in before settlement, or you want to move into your new home early. Both are possible by agreement, but they carry risk. Until settlement, the property is still the seller’s responsibility. Get a written licence that covers insurance, damage and what happens if settlement falls through.
Land tax and capital gains when you own two homes
Capital gains tax
If you buy a new home before you sell your old one, the ATO lets you treat both as your main residence for up to six months. Conditions apply. Your old home must have been your main residence for a continuous period of at least three months in the 12 months before you sell, and you can’t have rented it out in that time when it wasn’t your home. If the sale takes longer than six months, only the last six months are covered.
Land tax
Land tax is assessed on what you own at midnight on 31 December. If you’ve bought a new home and still own your old one on that date, Revenue NSW may give you a concession on both for one land tax year, provided you meet the conditions. Our land tax guide explains the exemption.
Tax outcomes depend on your circumstances, so speak to your accountant before you commit to dates.
Before you sign either contract
Checklist
- Talk to your lender or broker about which approach you can finance
- Decide which contract needs to exchange first, and what happens if the other falls through
- Have your lawyer review both contracts together, not one at a time
- Match or stagger the settlement dates, and check both allow electronic settlement
- Agree any rent-back or early access in writing
- Apply for your ATO clearance certificate for the sale
- Ask your accountant about capital gains tax and land tax timing
Rates, water and strata levies are adjusted on both settlements. Our guide to settlement adjustments explains how.
Frequently asked questions
Is it better to buy first or sell first in NSW?
It depends on your finances and the market. Selling first gives certainty about your budget. Buying first means you don’t miss the right property but can leave you with two loans. Talk to your broker about the money and your lawyer about the contracts.
Can I make my purchase subject to selling my house?
You can ask, but NSW sellers rarely agree, particularly in a competitive market. If they do, the condition needs clear deadlines and consequences.
Can I settle my sale and purchase on the same day?
Yes. In NSW both are usually settled electronically, with the sale settling first. A few days’ gap between the two gives you a buffer if something goes wrong.
Do I pay land tax if I own two homes on 31 December?
Not necessarily. Revenue NSW may give a concession on both homes for one land tax year if you’re moving from one to the other and meet the conditions.
What happens if my buyer doesn’t settle on time?
You can usually charge penalty interest and serve a notice to complete. But it may also delay your purchase, which is why a buffer between settlement dates helps.
Buying and selling at the same time?
Talk to our property team
Property & Conveyancing
Our team can review both contracts together, line up your settlement dates, draft rent-back or early access agreements and handle both transactions through to settlement, so one contract doesn’t put the other at risk.
This article is general information only and is not legal advice. It reflects NSW law at the date of publication. Please contact us for advice about your circumstances.
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Posted in Buying Property, Selling Property