Land tax at settlement

Discussion in 'The Buying & Selling Process' started by housechopper2, 20th Oct, 2017.

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  1. housechopper2

    housechopper2 Well-Known Member

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    Quick question on buying a house at auction in Victoria with a large amount of land tax owing. Is the new owner responsible for paying the land tax incurred in the years prior to settlement ? Or is this adjusted and paid by the previous owners at settlement ?
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    What does the contract say? Usually you would insist that it is paid before settlement otherwise you would be liable potentially.
     
  3. housechopper2

    housechopper2 Well-Known Member

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    It says:

    All periodic outgoings payable by the vendor, and any rent and other income received in respect of the property must be apportioned between the parties on the settlement date and any adjustments paid and received as appropriate.
     
  4. hobartchic

    hobartchic Well-Known Member

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    Check with a lawyer but it sounds like a buyer would be liable for land tax owed (probably the reason for the sale?)
     
  5. jrc

    jrc Well-Known Member

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    Does that clause then go on to say the period outgoings must be apportioned in a particular way. If it is the standard clause then land tax is apportioned and the property is treated as if for land tax purposes it is the only one owned by the Vendor.

    Follow terryw's advice
     
  6. Scott No Mates

    Scott No Mates Well-Known Member

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    @housechopper2 - is land tax adjustable in the contract? If so, it's now October and end of year settlement will mean that the land tax adjustment for the current year will be <1/12 of the year's amount.

    So you know how much the land tax is?
     
  7. housechopper2

    housechopper2 Well-Known Member

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    It says they will be apportioned as appropriate (the standard clause)

    Tax is 1k per year, but hadn't been paid for the previous 5 years. So will the vendor pay all the previous 4 years and I pay a pro rated proportion of the current year ?
     
  8. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    You should seek legal advice and probably add a special condition to this effect. Land tax owed produces a charge on the property so if you settle and land tax is owing you are basically liable.
     
    wylie likes this.
  9. housechopper2

    housechopper2 Well-Known Member

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    Thanks all for you assistance