Land tax – When Selling a property.

Land Tax liability is assessed on land you are not using as your principal place of residence.

You must pay land tax if you own land valued in excess of $300,000. 

If you own land that you are not using as your principal place of residence, you may be sent a Land Tax Notice of Assessment. 

The assessment is based on your ownership of land at midnight 30 June of the previous assessment (financial) year.  

If you own more than one property, land tax may be aggregated unless you own the lots in a different capacity.

You may be exempt from land tax in certain circumstances.

If you sell land between 1 July and 30 June, you are still liable for the land tax based on your ownership on the previous 30 June. 

Land tax assessment notices are generally issued between October and January.  However, if you sell your property land tax is payable at settlement.  As your Settlement Agent we will receive a Certificate of Land Tax issued by the Department of Finance – Land Tax.

If you are liable to pay land tax, you may also be required to pay metropolitan region improvement tax (MRIT).

MRIT is imposed on property with a land tax liability at a rate of 0.14 cent for every dollar of the aggregated taxable value of the land in excess of $300,000.

MRIT is a special purpose tax used to finance the cost of providing land for roads, open spaces, parks and similar public facilities. It is payable in addition to land tax on property located in the metropolitan area. See a map of the metropolitan region. http://www.drd.wa.gov.au/Publications/Documents/Metropolitan_Perth_LGA_boundaries.pdf

Apportionment between the Seller and Buyer only applies in certain circumstances.  Referring to the 2018 General Conditions for the Sale of Land:

7.3. Buyer not liable for Land Tax

The Buyer is not liable to pay any amount on account of Land Tax if the Property is at the Possession Date a residence which is capable of being sed as a residence and for no other purpose.

7.4. Settlement Date 30 June

  1. a) If

1) The Settlement Date is before or on 30 June, and 

2) Settlement does not occur before 5 pm on 30 June for a reason attributable to the Buyer. 

The Buyer may pay to the Seller any Land Tax assessed in respect to the Land as the midnight on 30 June calculated as if the Land is the only land owned by the Seller.      that;

  1. b) If

1) The Settlement Date is before or on 30 June:

2) A separate Certificate of Title for the Land has been issued before 1 June:

3) The Seller has given a Notice to the Buyer not later than 15 Business Days before the Settlement Date. 

  1. A) The Seller is registered proprietor of Land other than the Land and
  2. B) The Land and that other land are liable to Land Tax, and

4) Settlements does not occur before 5:00 Pm on 30 June for a reason attributable to the Buyer.

The Buyer must pay to the Seller at Settlement the Land Tax assessed in respect to the L:and for the Financial Year which commences on 1 July following the date specified in subclause (b)(1)

  1. c) Subjected to subclause (d)

1) The Notice as specified in subclause (b)(3) may, subject to the Contract Date being before 1 June, be incorporated in the Contract and,

2) If the Notice is incorporated in the Contract in accordance with subclause (c)(1) that Notice is treated as having been given in accordance with subclause (b)(3)

  1. d) Subclause (c) does not apply unless before 1 June

1) A separate Certificate of Title for the Land has been issued; and

2) The Buyer has been given Notice by the Seller of the Issue of that separate Certificate of Title for the Land.

7.5. Land Tax – Subdivided Land

  1. a) If on the Possession Date.

1) The Property Is not a residence as described in clause 7.3. and

2) The Land is the subject of a subdivision after the commencement of the Financial Year in which the Possession Date occurs.

Land Tax will be apportioned as specified in subclause (b)

  1. b) If subclause (a) applies. Land Tax is apportioned and payable as an Outgoing in accordance with clauses 7.1 and 7.2 on the basis that the Land Tax Payable in respect to the land is.

1) The same proportion as the area of the land beats to the total area of the Subdivision Land; and

2) The Subdivision Land is the only land owned by the Seller.

7.6. Land Tax general

  1. a) If clause 7.3. applies; the Seller must pay all Land Tax assessed in respect to the Property.
  2. b) Except as provided in clause 7.3. and subject to clauses 7.4 and 7.5. Land Tax must be apportioned

1) As an Outgoing and paid as provided In clauses 7.1 and 7.2; and 

2) Otherwise on the basis that the Land is the only land owned by the Seller.

 

For further information, please see hyperlinks below:

Hyper Links from the Department of Finance website, that may help you understand land tax.

Land Tax Notice of Assessment (https://www.wa.gov.au/government/publications/land-tax-assessment-notice

(https://www.wa.gov.au/government/publications/taa-cp14)  (https://www.wa.gov.au/government/publications/taa-cp16

If you own more than one lot, your land holdings will be aggregated:

https://www.wa.gov.au/government/publications/land-tax-cp-lt1

Land tax exemptions in certain circumstances 

https://www.wa.gov.au/service/financial-management/taxation-and-duty/apply-land-tax-exemption

 

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