When you purchase a property in Queensland, as part of the conveyancing process your lawyer will undertake a land tax search of the property to ensure there is no outstanding land tax that remains unpaid by the seller.
Land tax is a tax on freehold land imposed by the State Government. For the purpose of assessing land tax, the term ‘land’ includes:
- Vacant land;
- Land that is being built upon;
- Lots a building unit plans;
- Lots in a group title plan; and
- Lots owned by a home unit company.
Land tax is payable by the owner of the property, usually the person listed on the certificate of title. For the purpose of land tax, an ‘owner’ does not include a mortgagee bank, a body corporate, or tenants under Crown leases.
As Land tax is payable by the ‘owner’ of the property it is vital that you have a lawyer undertake a land tax search prior to settlement. This is because under a contract of sale for the property, the owner of the property will be the seller up until the settlement date. As soon as settlement occurs and the buyer takes possession they will become the ‘owner’ of the property, This means that the liability for payment of land tax will then pass to the new owner.
If you do not have a Lawyer undertake a land tax search then if any tax remains unpaid following settlement, you as the buyer, will become liable for its payment and are unable to claim compensation from the Seller.
Land tax is calculated on June 30 each year and is paid by the owner of the property at this time. Where a contract of wale is signed before June 30, but the buyer does not take possession until after this time, the seller will remain liable for its payment.
In circumstances such as these the amount of land tax payable by each party should be apportioned. This is a matter that will be negotiated between the Lawyers for each party.