property

• A prohibition on the ability of a Vendor to pass on land tax liability assessment against a property. The current position in respect to land tax is that in the event land tax is assessed against a property, then at settlement land tax is apportionable between the parties in the usual manner (similar to council and water rates). For example, if settlement was to occur on 30 June, then a Purchaser would effectively have to pay half of the land tax. This change in the legislation will mean the Vendor is responsible for the full years land tax regardless on when they settle.  In addition, penalties will be imposed if a Vendor breaches these provisions.

• A prohibition on a Vendor being able to pass on any existing windfall gains tax liability.

The proposed Bill indicates that the above changes will take effect from 1 January 2024.

A further change relates to vacant residential land tax. Currently this tax is assessed at 1% of the capital improved value and is imposed on residential land in Melbourne’s inner- metro areas that are unoccupied for more than 6 months in a calendar year. The geographic limitation is being amended by removing the geographical limitations so that it applies to all vacant residential land across Victoria. This amendment is proposed to be effective from 1 January 2025.

The intention of the amendments are seen to be consumer protection measures in order to increase transparency for the overall cost for property purchases.

If you have any queries relating to property law issues and how it may impact your transaction, then please feel free to contact our Property & Development Team.