[URGENT]land tax adjustment at settlement

[mimimao]

Hi All,

My close friend purchased a property in February this year and in the contract the only clause relating to land tax or adjustment says:
"OUTGOINGS AND STATUTORY CHARGES:
Information concerning any rates, taxes, charges or other similar outgoings (including any Body Corporate charges) AND any interest payable on any part of them are as follows -
(1) Whitehorse City $xxxx
(2) Yarra Valley Water $xxx

Their total does not exceed $2000

The purchaser will become responsible for proportionate amounts of the current rates and charges set out above in consequence of the normal adjustments to be made on settlement. The purchaser may become liable for Land Tax depending upon other real estate owned in Victoria."

This property is in Victoria. This is my friend's first property (not that it'll make a difference but I thought I just mention it)

I have seen many many contracts and this is one of the few ones that actually don't mandate adjustment of land tax. She hired this very dodgy cheap conveyancer that just adjusted everything. So she's been asked to pay $985 in land tax adjustment. I told her she shouldn't need to pay because Land Tax Act does not provide for pro rata adjustment; and there is nothing in the contract that says land tax must be adjusted between the parties (most comprehensive contracts will have this clause though). This one says "the purchaser may become liable"

Your thoughts guys?

Cheers!
mm

 

[Terry_w]

Thoughts? It pays to get good advice!

Maybe there is a separate clause in the contract on who pays what with the land tax. If this is not specificially covered then it may come under a general clause.

 

[NedKelly]

The vendors will have to pay land tax for the whole of year 2012 based on what they own on 31st December 2011. Any pro-rata apportionment will be down to what it says in the contract. Having said that, if the apportionment is $985 for 2 months, that would gross up to $5910 for the year. How much is the property purchase?

 

[Peterw]

My understanding is that Land Tax is levied, on ownership as of 30 June each year. It takes a while for th eassessment to be issued, and you are given a month or 2 to be paid. If the land tax is not paid at settlement, the outstanding amout can then become a libility of the new owner. Contracts usually identify if there is a charge that occured prior to the entering into the contract, is the seller responsibility. Again as Terry W ssaid, you need to get some good advice on the terns of your contract. I am not aware that Land Tax is appoitioned. If I bought on 20th June and sold on the 20 th of July, I would be liable for the land tax. Thats as I understand it.

 

[NedKelly]

Yes, that is correct in Queensland. In Victoria the cut off date is 31st Dec.