NSW Land Tax sell date

The Fence · 26th Nov, 2011

Can't seem to find out on the OSR website an answer for this:

Land Tax is levied on land owned at midnight 31st Dec each year for the purposes of land tax in the following year.

When you sell an IP is this ownership changed at exchange of contracts date or at settlement date....?

Say I exchange contracts before 31st DEC 2011 but settlement is in Jan 2012...?

Any held from those with experience in such a case would be appreciated.

Lofty · 26th Nov, 2011

In NSW the government regard you as having disposed of the property at exchange of contracts.

We can confirm this as we put in Land Tax variations on our vendor finance Instalment Contracts after exchange takes place and the Land Tax liability transfers to the buyer under the Instalment Contract.

Cheers, Paul

sentsie · 19th Dec, 2011

The Fence said:
Can't seem to find out on the OSR website an answer for this:

Land Tax is levied on land owned at midnight 31st Dec each year for the purposes of land tax in the following year.

When you sell an IP is this ownership changed at exchange of contracts date or at settlement date....?

Say I exchange contracts before 31st DEC 2011 but settlement is in Jan 2012...?

Any held from those with experience in such a case would be appreciated.

Got a similar (not identical) problem, we rang the OSR the land tax dept (1300 139 816) and the answer is " ... the ownership changed at the settlement date ..."

Aaron_C · 19th Dec, 2011

I guess on the 31st December the government still sees you as the landowner, despite having sold the property prior (how would they know?). But you would make adjustments for land tax at settlement to reflect the new ownership change.

Terryw · 19th Dec, 2011

I think land tax is levied on the legal owner as of 31 Dec each year. So it you haven't settled on a sale then it is the vendor. But watch out for provisions in the contract of sale.

Macca · 19th Dec, 2011

Just to confuse things, I have been told that the ATO works on the contract date, not the settlement date.

It would seem logical that all legal stuff would be the same rule

Aaron_C · 19th Dec, 2011

Macca said:
Just to confuse things, I have been told that the ATO works on the contract date, not the settlement date.

It would seem logical that all legal stuff would be the same rule

Yes for normal capital gains they do. But if you are selling new properties that are treated as trading stock, then the disposal date is the actual settlement date, not the contract date.

SYD · 20th Dec, 2011

Aaron_C said:
I guess on the 31st December the government still sees you as the landowner, despite having sold the property prior (how would they know?). But you would make adjustments for land tax at settlement to reflect the new ownership change.

I haven't heard of land tax adjustments before even if purchase and settlement straddles 31 Dec.

What happens when purchase and settlement takes place mid year?

SYD

Scott No Mates · 25th Dec, 2011

It depends on what the parties agree, if it is a sale between 2 investors, then a land tax adjustment often occurs. Generally not an issue if it is a sale of owner-occupied to investor.

jrc · 15th Nov, 2014

Lofty said:
In NSW the government regard you as having disposed of the property at exchange of contracts.

We can confirm this as we put in Land Tax variations on our vendor finance Instalment Contracts after exchange takes place and the Land Tax liability transfers to the buyer under the Instalment Contract.

Cheers, Paul

I think this is not because of exchange, but because your buyer is in possession and thus deemed to be the owner

Scott No Mates · 15th Nov, 2014

jrc said:
I think this is not because of exchange, but because your buyer is in possession and thus deemed to be the owner

The buyer is only in possession of the property upon settlement, regardless of an early access agreement. You must specifically allow the land tax adjustment if you want the purchaser to bear the cost esp if it settles on 2 January.

NSW Land Tax sell date

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The Fence

Lofty

sentsie

Aaron_C

Terryw

Macca

Aaron_C

SYD

Scott No Mates

jrc

Scott No Mates

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