With a new Financial Year upon us, we thought it pertinent to discuss the adjustment of Rates and Taxes as part of a property settlement.
This in an important task
This task is performed by your Conveyancer when buying or selling property.
What adjustments are made?
The most common adjustments made are
- Local Council
- SA Water Rates
- Emergency Services Levy
- Land Tax (if the property is a Strata Unit or Community Lot an adjustment of Fund payments is also required)
Some clients are of the mistaken opinion that Electricity and Telephone accounts are also adjusted. These utility payments are deemed to be accounts of a personal nature and require organisation of final readings and closure by the client.
Additionally, it is the responsibility of the Purchaser to arrange for new electricity and telephone accounts in their name/s from the date of settlement.
The rating assessment year for Council, ESL, SA Water rates and Land Tax runs from July 1 to June 30 (Strata Unit or Community Lot rating years run to the end of the financial year for the individual Corporation).
Council Rate calculation
Council Rates and ESL are adjusted on a daily basis according to the period of the rating year occupied by the Vendor (to the date of settlement) and the Purchaser (post settlement) and paid in full to the end of the rating year.
SA Water Rates
SA Water rates are also adjusted on a daily basis however, they are usually only paid until the end of the next rating quarter. If a property has a water meter installed a special meter reading will be ordered and the amount of water used to the date of settlement will be calculated from the meter reading result.
Land Tax calculation
If a property attracts Land Tax, the tax will be split into two categories.
1. Single Holding Land Tax is that proportion of tax applicable to the particular property as a single entity and is adjusted on a daily basis between Vendor and Purchaser.
2. Multiple Holding Land Tax is that proportion of Land Tax assessed against the property based on the value of the multiple land holdings of the Vendor.
Generally, most contracts for sale and purchase specify that Provisional Land Tax is not adjustable at settlement and remains the liability of the Vendor. A Conveyancer will attend to payment of this tax on behalf of the Vendor to ensure that the Purchaser is obtaining the property free of any charges.
For any further advice regarding adjustments of rates and taxes or any other property matter contact Strathalbyn Conveyancing.