Ownership status when buying or selling land.
For land tax purposes, and in certain circumstances, we may consider that both the existing owner and the incoming owner of the land are owners. In particular, you are considered the owner, but not the only owner, if:
- you have disposed of the land (e.g. under a contract of sale or a declaration of trust) but retain possession of it
- you have purchased the property under a contract of sale and have taken possession
- you are the vendor of the land under a contract of sale until the purchaser has taken possession and paid at least 15% of the purchase price. Subject to conditions, once the purchaser under a contract of sale has taken possession and paid at least 15% of the purchase price, the vendor will no longer be considered an owner.
A purchaser or assignee or transferee of a purchase on credit or deferred payment is also the owner of land.
We may also find that you are not the owner of the land if you have in good faith disposed of the land for no consideration and the new owner has taken possession. The new owner will be considered the owner of the land.
Mortgagees in possession
If there is a mortgage over your land, and your lender has taken possession of the land, then both you and your lender will be considered the owners of the land.
Possession of land
Generally, you are considered to have possession of the land if you have a right to occupy the land and a right to the income and profits derived from the land.
Prohibition on apportionment
In the past, vendors and purchasers could agree to split land tax at settlement. The purchaser’s share was usually based on how many days they would own the land during the tax year.
From 1 January 2024, vendors are prohibited from passing on land tax to a purchaser under a contract of sale if the sale price is below a set threshold. ‘Sale price’ is the price of land that is specified in the contract, however expressed, inclusive of GST. The threshold amount for the year starting on 1 January 2025 is $10,400,000. This threshold is adjusted annually based on the Consumer Price Index and rounded to the nearest $100,000.
A provision in a contract of sale of land that purports to require a purchaser to pay an amount for or towards land tax which the vendor is liable for, or may become liable for, is void and of no effect. It is an offence for a vendor to include such a provision in a contract of sale of land. The relevant provisions are in sections 10G, 10I and 58(1) of the Sale of Land Act 1962 (Vic). Contracts signed before 1 January are not affected.
