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Land Tax adjustment at settlement
11 May 2017

Land Tax adjustment at settlement

Land tax is a state government imposed tax on investment properties. It’s very similar to stamp duty and is a major source of revenue for the government. Purchasers who buy property from vendors who have land tax obligations may be liable to pay a portion of the land tax to the State Revenue Office — by way of a land tax adjustment at settlement.

Land tax:

  • is payable once the threshold of $250,000 is exceeded;
  • has a number of exemptions, including the principal place of residence (PPR) exemption which is not taxable;
  • is payable on investment property which exceeds the threshold;
  • is calculated on an unimproved lot value, so that the value of improvements on the land, such as buildings and structures, is not taxable;
  • is calculated on the aggregate of investment land owned; and
  • is calculated on a sliding scale, so that more valuable land attracts tax at an increasing rate.

What are adjustments?

At settlement, outgoings are apportioned between the vendor and purchaser so that each party pays their fair share of the outgoings. The vendor pays outgoings up to, and including, the day of settlement and the purchaser is responsible for outgoings thereafter.

General condition 15 of the standard form contract of sale states as follows:

 15.1     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.

15.2     The periodic outgoings and rent and other income must be apportioned on the following basis:

(a) the vendor is liable for the periodic outgoings and entitled to the rent and other income up to and including the day of settlement; and

(b) the land is treated as the only land of which the vendor is owner (as defined in the Land Tax Act 2005); …

How to calculate Land Tax adjustment at settlement?

The differentiating feature between land tax adjustment at settlement and other outgoing adjustments is its ad valorem nature. Land Tax is calculated on an increasing scale on the aggregated value of the vendor’s land and then apportioned across the vendors total land holdings.

The purchaser of property may therefore be exposed to paying land tax at an inflated rate because the vendor owns other land. General condition 15 (b) of the standard form contract of sale recognises this and requires land tax adjustment at settlement to be on the basis that “the land is treated as the only land of which the vendor is owner”. This is called the single holding formula.

The property sold is therefore isolated from the vendor’s other land holding and a calculation of how much the purchaser must contribute to the vendor’s land tax is made on this basis. This additional information of the single holding basis is contained on the second page of the Land Tax Certificate.

Contact us to discuss your Land Tax obligations by speaking to one of our experienced Melbourne property lawyers.

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Alfred Tsang
Alfred Tsang
12:44 05 Jun 20
Celal has been a great supporting presence during our first home purchase. My partner and I had used Haitch Legal for... contract reviews and conveyancing needs during settlement of our home purchase. Despite having a million questions Celal was always happy to answer them and guided us through the process. Everything was made simple for us to understand which gave us the right confidence to successfully purchase and settle our first home!read more
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Guner Hussein
13:04 27 May 20
Halil is a long time colleague of mine and I can testify to his professionalism and quality service. He is a smooth... operator who takes the guesswork out of your purchase or sale of property.read more
Becky Bolu
Becky Bolu
03:24 10 May 20
I have engaged Haitch Conveyancing based on their 5 star reviews and their quick response and transparent... pricing.Celal and Halil reviewed couple of contracts for me and always pointed out important matters and provided change feedback in timely and consistent manner. When I found the one, Celal has reviewed the contract very promptly and kept me updated with all the progress during settlement period. Everything was calculated correctly and he ensured all involved parties and agencies are also informed. I cant thank enough to Celal and Halil for their service and making this home buying process as easy as.I strongly recommend Haitch Conveyancing to anyone in Victoria, Australia for all property matters.read more
Liz Sutherland
Liz Sutherland
23:41 01 May 20
I utilised Haitch Conveyancing for my first property purchase and they were nothing short of brilliant. They were... thorough, prompt, always had time for me, and explained things in ways I easily understood. The whole team were amazing. I'd recommend them to anyone looking for conveyancing services in Melbourne, I wouldn't go with anyone else.read more
Henry Rosel
Henry Rosel
20:10 10 Mar 20
Halil and team were nothing short of amazing! Answering queries within hours and having everything settled on time and... without hiccup.Will be using Haitch for all future settlements. Thanks again.read more
Aloka Moghe
Aloka Moghe
00:56 07 Mar 20
We knew very little about conveyancing process but Halil explained the process in detail to us and made the process... painless. Katarina was excellent with communication keeping us up to date as it progressed.Would highly recommend Haitch Conveyancing.read more
Ali Han Yenisehirlioglu
Ali Han Yenisehirlioglu
03:10 03 Mar 20
Haitch Conveyancing has provided legal services for us for a property settlement in Melbourne. Their service was very... personalized, on - time and flawless. I was able to reach them whenever i had questions and each time they took their time to explain all the relevant details to me. I would never work with any other law office for conveyancing ever again. I recommend Haitch to every Victorian.read more
Bob Airlie
Bob Airlie
02:32 27 Feb 20
The team was fantastic, easy to deal with, everything was done electronically and via email. Can call at any time and... receive an answer to your questions.read more
KrisDavid DayClarke
KrisDavid DayClarke
08:14 26 Feb 20
The Team at Haitch Conveyancing took care of conveyancing in a friendly and efficient manner.
Maajed Durrani
Maajed Durrani
02:39 04 Feb 20
Halil & Katarina have assisted me with my property purchase. They are efficient & easily approachable. Replies to... email are very prompt. Highly recommended for their services.read more
Le Bui
Le Bui
10:40 10 Dec 19
Friendly, helpful and experienced team who is very approachable and supportive. Thank you for helping through with my... first home purchase!read more
Yun Bai
Yun Bai
00:14 10 Dec 19
The service was friendly and professionally. Highly recommended.
Aisar Khoder
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23:50 05 Dec 19
Halil assisted me with my property sale. He is very approachable and efficient with his work. Very highly recommended... and fairly priced.read more
Grant Taylor
Grant Taylor
10:04 26 Nov 19
Efficient team. They made our conveyancing process very easy
Simon Bosma
Simon Bosma
04:07 08 Aug 19
Halil helped us with the conveyancing for the recent purchase of our first home. A potentially stressful process was... made very simple, always picks up the phone and quickly responds to emails and a very reasonable fee. Highly recommended and would work with again.read more
Mursel Duz
Mursel Duz
03:07 05 Aug 19
Haitch Conveyancing act on my behalf as vendor. There were 2 townhouses both has settled on time perfectly. even though... there were some issues with the purchaser's bank etc. But Halil made it happened and both settled smoothly. Great service and highly recommended.read more
Reuben van Bemmel
Reuben van Bemmel
10:03 22 Jul 19
Halil has been immensely patient and helpful.
Stephanie Braham
Stephanie Braham
09:40 19 Jul 19
Haitch Legal did an excellent job taking care of our property purchase settlement. They made the whole process seem... seamless. Halil and Katarina were always patient and accessible and willing to answer any question I had. Very reasonably priced too. Will use again.read more
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Yasin Ilanbey
08:39 21 May 19
5 stars for Halil Gokler and his professional team of lawyers/conveyances.
clean connection
clean connection
03:02 01 May 19
Halil & Katarina are approachable with queries. We use them for all our business dealings. Would highly recommend to... all !!!read more
Joie Goman
Joie Goman
02:51 25 Apr 19
Highly recommended! Halil assisted us through our conveyancing and always replied to our emails and questions... promptly. His fees are also very reasonable and explained the conveyancing process to us. Halil and his team are very friendly and professional. We would use his service again.read more
Laura McMenamin
Laura McMenamin
03:59 14 Mar 19
Halil and Katerina were brilliant. Very responsive and patient with all our questions. Highly recommend.
samiamansourSM
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11:04 08 Mar 19
Excellent service with very cordial staff . Thank you for your support and assistance.
Sam Watkins
Sam Watkins
05:59 20 Dec 18
Halil and Katrina of Haitch Conveyancing assisted us in buying our family home. They were friendly and helpful, and did... great work. We are very happy to recommend them.read more
Varun R
Varun R
04:56 10 Dec 18
Getting Halil Gokler to assist with our property purchase was the best decision we made. Halil's service and... professionalism went above and beyond his fixed quote for services. It paid off having a qualified lawyer provide this service as, when the conveyancers on the other side were incompetent and didn't settle on time, Halil was on hand with pragmatic advice to help us achieve a good outcome.read more
sinan demir
sinan demir
04:24 28 Nov 18
We use Halil and refer our clients to him. We get good feedback. Great service with prompt response times at a... reasonable price. Highly recommend Halil and his team at Haitch legal. Thank You Halil from Demir & Co Accountants.read more
Steve Williams
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00:03 21 Nov 18
We can't recommend Halil enough. He was fantastic in helping us with our first home settlement. We were late acquiring... his services in the process but Halil's service went above and beyond to sort everything within a tight time frame and patiently explained everything to us when we had many many questions! Made what was a tricky situation completely effortless. Highly recommend him.read more
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