Hi
I'm buying a Torrens title property and on the first page of the sales contract, "land tax adjustable" is ticked "yes". My solicitor contacted the vendor's solicitor saying it should be ticked as "no", reason being vendor will be able to get a refund from land title office after the property is settled and i should not be involved in this. The vendor's solicitor said that's correct and that's why he ticked "yes".Who is correct? If both solicitors think they are correct, what should i do?
Thanks a million
AOIs there a box for maybe?
(Not sure either sorry)
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Did you ever find the answer to this question as I myself am now facing the same dilema!
AO, assuming that you are in NSW, then it can be either y/n. Basically, it means that the vendor was the owner as at 31/12/07 & has been assessed for land tax (which they may have already paid). They are seeking reimbursement of the portion from settlement thru to december ie 75% of it. There is no benefit to yourself in reimbursing the vendor and you can't claim it back. Contact the office of state revenue to check http://www.osr.nsw.gov.au You are within your rights to submit your offer conditionally that you will not reimburse land tax or on a single holding basis (if the first isn't an option). The Threshold is $359k and it is charged at 1.6% of the land value – not of the sale price. Land tax will not be significant unless you are buying an expensive property
Thanks Scott.I've checked out the OSR however they can't really advise any further other than to say to apply for a clearance certificate, but that doesn't help if the contract says that there will be an adjustment. I just don't see why the current Vendor (who owned the property through his company) should expect me to pay towards his land tax when I am buying the property as an individual as my principal place of business. The property in question has a purchase price of $960,000 so it's not cheap, I believe the land value is about $650,000. So does this mean that the property land tax is about $4,600 and the Vendor expects me to contribute towards this cost? Do they calculate it in the same way as rates, (ie you pay from when you take ownership?) None of it makes any sense to me, why should they even expect me to contribute towards their costs?
Oops, typo, I meant I am buying it as my principal place of residence not business!
Oops again – meant to ask what you meant by "single holding basis"? I shall be contacting the agent today to say that my offer was subject to no land tax adjustments, however if they reject this I wondered what you meant by the other option? What does this mean exactly?
Basically, the vendor is trying to recoup land tax that they have paid – there is no obligation to pay unless you have agreed on the contract (I usually nominate that as it will be a PPOR then I won't be taxed so I shouldn't bear this cost – confirm with your solicitor & accountant). There is no benefit to you for paying someone else's tax bill.Depending upon how the vendor owns the property it may or may not have the benefit of the land tax threshold (eg company). However if you do have to agree to reimbursement of land tax, do so only on a 'single holding basis' so that the amount to be reimbursed takes into account the threshold – again, speak to your solicitor to frame this correctly. (Single holding basis refers to a threshold above which tax is charged eg current threshold is $359k total holdings, so in your case $650-$359 = $291k x 1.6% = $4600 vs $9,100 if no threshold was applied).The reimbursement is calculated the same way as rates etc – eg if the land tax for the whole year was $12k, settlement is 1 April, then the reimbursement is only for 9/12 of the total.If the only area to conclude the sale is land tax, present the agent with a signed contract with your preferred (no land tax) ticked. He will be obliged to pass it on – good tactic to use to get a hurry on. Make sure that you write your conditions onto the contract (seek your solicitor's advice) and put a sunset clause (expiry on the offer).
Thanks. Will do.
Can someone please advise if there is a way of claiming a land tax refund as indicated above. I sold a property in March last year and have just recieved a land tax bill for that property for the whole year. My solicitor never mentioned anything about land tax, should they?
Cheers
TammyTammy, as far as I know, land tax is charged annually in advance based on the ownership as at 31 Dec of the previous year. You may need to check if the bill is for last year or for this year, and advise the OSR that you have disposed of the property. Query your solicitor as to why they did not make a land tax adjustment to the property.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
