On top of the new Sellers Disclosure, there is also a new contract. For some reason someone has snuck in a seemingly harmless tick box on Land Tax. But it is anything but harmless! A quick lesson on Land Tax: It is a state government tax that applies to investment properties and is only payable once your land value hits a certain threshold.
Unlike rates that you pay quarterly, Land Tax is an annual bill and payable by the owner based on the total land value of their investment portfolio on June 30, for the following financial year. It’s very unpopular, like most taxes, but what makes this one a little spicier is it has nothing to do with income. Up until August 1, land tax had not been a part of the standard contracts. But now, god knows why, it has found its way onto the contract and it is already causing issues. On a contract this week it affected the buyer by $30,000 and subsequently stopped the deal. The new contract allows for a seller to claim their prepaid land tax from the buyer.
This could mean a normally exempt buyer (eg. a first home buyer) has to repay them at either the rate the seller would have paid as an isolated asset or, if the seller wants too, at the inflated rate based on their portfolio value. In 30 years of selling only once has a seller requested the buyer contribute to their land tax. So why it is now pride of place on a contact is beyond me.
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