A Hidden Cost in Property Contracts
Since August 1, 2025, Queensland's Property Law Act 2023 and new seller disclosure requirements have introduced important changes to property transactions. While these reforms aimed to increase transparency, they've created an unexpected issue: many buyers are unknowingly agreeing to pay Land Tax that should be the seller's responsibility.
The issue centers on the Land Tax adjustments section in property contracts. In many cases, these adjustments lead to significant costs. Therefore, Land Tax traps Queensland property buyers who are not fully informed.
In This Article
The Growing Problem
At MCG Legal, we're encountering an increasing number of contracts, particularly those drafted by real estate agents, that require buyers to pay a portion of the seller's Land Tax obligation. This clause appears as standard contract language, but it can result in buyers paying hundreds or even thousands of dollars in additional costs.
Understanding the Basics
Who Actually Owes Land Tax?
The fundamental principle is clear: Land Tax is the seller's responsibility.
Land Tax is calculated based on the owner's total Queensland property holdings as of June 30 each year. Buyers do not automatically pay any portion of this tax unless the contract explicitly states otherwise. This is where the problem lies.
The Contractual Trap
Many contracts now include clauses that transfer the seller's Land Tax burden to the buyer. These provisions are purely contractual. There's no legal requirement for them. However, they can and should be negotiated before signing any contract to purchase.
The risk: If a buyer signs the contract without legal review and the payment of the sellers Land Tax is included, they've effectively agreed to pay a tax they should never have been responsible for.
What to Look for in Your Contract Land Tax Clause
Standard Land Tax Clause Options
Recent Queensland property contracts typically include a section with Land Tax adjustment options.
The second and the third option, "adjusted on single holding basis" & "adjusted on the seller's actual land tax liability", is where buyers face potential costs they shouldn't bear. The first box is the only box that should be elected which is "No adjustment to be made for land tax."
Key Takeaways
- Land Tax is fundamentally the seller's obligation, not the buyer's
- Many standard contracts now shift this cost to buyers through negotiable clauses
- This adjustment can cost hundreds to thousands of dollars
- These clauses are not legally required. They're contractual terms that can be negotiated
- Always have a property lawyer review your contract before signing
Protect Yourself
Before signing any property contract in Queensland:
- Have MCG Legal review all clauses, particularly the Land Tax adjustment section.
- Negotiate to remove or modify unfavorable Land Tax clauses.
- Understand that standard contract terms don't mean they're fair or non-negotiable.
- Don't assume that because something is pre-printed, it must be accepted.
A simple contract review can save you significant money and prevent unexpected costs at settlement.
At MCG Legal, we help Queensland property buyers navigate contracts with confidence. Our team review contracts every day to protect clients from hidden costs, including unfair Land Tax clauses. Land Tax Traps Queensland property buyers but with our help, you can avoid these pitfalls.
Thinking of buying property in Queensland? Let us review your contract first to ensure your rights are protected, and you are not paying for anything you shouldn't have to.
