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Tax Tip 95: Land Tax in NSW Between Exchange and Settlement

Discussion in 'Accounting & Tax' started by Terry_w, 5th Jan, 2016.

  1. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Land Tax in NSW Between Exchange and Settlement

    In NSW land tax is levied on the owner of the property. It is generally legal ownership that determines who is liable.


    When a property purchase has been contracted, but title hasn’t transferred the seller is considered the owner for land tax purposes until settlement. Section 26 Land Tax Management Act NSW 1956.


    One exception to the above is

    if the purchaser is entitled to any rents or profits derived from the tenancy,

    or

    If the purchaser is entitled to possession of the land and has taken possession.

    In this case the purchaser will be considered the owner for land tax purposes – s 26(3). This would apply to instalment contract sales of property where possession has been granted but title won’t transfer until paid for in full.


    Tip – try to settle after 01 January as the vendor will be liable for the land tax for the year to come, subject to the terms of the contract.

    see

    LAND TAX MANAGEMENT ACT 1956 - SECT 26 Purchaser and vendor
     
    Last edited: 7th Jan, 2016
  2. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

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    Should this be seller or purchaser? One would assume the seller already has possession?
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    good pick up Dave. Should be purchaser. thanks
     
  4. Scott No Mates

    Scott No Mates Well-Known Member

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    From a vendor's perspective ensure that any land tax liability which arises due not only end of year but delayed settlement is at the purchaser's cost.