Can a Seller Adjust Land Tax at Settlement in Victoria? The 2026 Rules

Since 1 January 2024, Victorian law has restricted sellers from passing land tax to buyers through a contract adjustment. For the calendar year beginning 1 January 2026, Consumer Affairs Victoria states that the threshold amount is $10.7 million. Most residential sales therefore fall within the prohibition.

What the prohibition means

Where the sale price is below the applicable threshold, the seller must not require the buyer to reimburse or adjust the seller’s land tax liability under the contract.

This differs from ordinary council, water, owners corporation or rent adjustments, which may still be calculated under the contract.

Why old contract precedents are risky

Contracts and special conditions used before 2024 may contain land-tax adjustment clauses that no longer comply with the law. Sellers should not reuse an old contract without current review.

A conveyancer preparing the seller’s Contract and Section 32 should use the rules and threshold applying to the relevant contract date.

Land tax can still affect the transaction

The prohibition on passing land tax to the buyer does not erase the seller’s land-tax liability. Outstanding tax, charges or notices may still need to be dealt with so the buyer receives the title position required by the contract.

Where a sale exceeds the annual threshold or has unusual commercial terms, the contract requires specific advice rather than a standard residential assumption.

Windfall gains tax is separate

Victoria also restricts passing on an assessed windfall gains tax liability in specified circumstances. Land tax and windfall gains tax are different taxes with different triggers.

Buyers should review the entire adjustment framework rather than focus on one line item. See our explanation of property settlement adjustments.

DY practical point

When reviewing a contract, look beyond the standard general conditions. A prohibited reimbursement can be hidden in a special condition described as an outgoing, contribution or settlement payment.

Frequently asked questions

Can land tax be adjusted on an ordinary residential sale in 2026?

Generally not where the sale price is below the 2026 threshold amount of $10.7 million.

Does this mean the seller does not pay land tax?

No. It means the seller generally cannot pass that liability to the buyer through the prohibited contract adjustment.

Can council and water rates still be adjusted?

Yes, ordinary outgoings can still be adjusted according to the contract. The land-tax prohibition is specific.

Official references

Consumer Affairs Victoria — Conveyancing and contracts for sellers

This article provides general information about Victorian conveyancing as at 17 July 2026. It is not legal or financial advice. The correct approach depends on the contract, title, parties and circumstances of each transaction.