adjustment to rates and taxes - standard contract


Regardless of who actually pays the rates to the government or council an agreement under a typical standard contract for the sale of a house ensures that the seller and the buyer as between themselves make a money adjustment in proportion to the time each is the owner. That is, pro rata adjustment.


Excess water rates are payable by the owner who used the water. It is therefore important to establish before completion what the exact situation is with regard to such rates. Where necessary, a special water meter reading should be ordered.


In NSW, a local council is bound by the answer it gives in relation to rates even if later, it proves to have been mistaken. If you can later show the rate adjustment on completion was wrong, you still have legal rights against the seller, although that would be expensive to enforce in comparison to the claim. 

Some pensioners are eligible to have their rates (not including excess water) either deferred or remitted. If you may be eligible, alert your solicitor so that they can advise you on the up to date position on your eligibility.

Land tax will be payable if the home is being used as an investment. A tax deduction for rates is available only if the property is bought to gain assessable income. An investor can claim only the proportion of rates actually borne.