Rates, land tax and the settlement adjustment, decoded

A few days out from settlement day, a document called the statement of adjustments lands in your inbox. It is a page of pro-rated figures nobody warned you about, and it changes the exact amount of money that changes hands at settlement. Here is how to read it without the headache.

What is the statement of adjustments?

The statement of adjustments divides the property's ongoing charges between vendor and buyer so that each side pays precisely for the period they own the property. The vendor covers everything up to and including settlement day, and the buyer covers everything after. Since bills like council rates arrive annually or quarterly rather than conveniently stopping at settlement, the paid and unpaid amounts get apportioned day by day.

The conveyancers on both sides prepare and agree these figures as part of the run-up covered in our guide to what happens between contract and settlement. The result folds into the final settlement figure: the balance of the price, plus or minus the adjustments.

The usual lines on the statement

• Council rates. Levied for the financial year. If the vendor has paid the year in full and settlement falls halfway through, the buyer's share of the remaining period is added to what the buyer pays at settlement. If the rates are unpaid, the split runs the other way.
• Water charges. Service charges are apportioned like rates. Usage is handled with a special meter reading around settlement so the vendor pays for water actually used up to the day.
• Owners corporation levies. For apartments and townhouses, the quarterly levies are split the same way. Any special levy needs particular attention, and the owners corporation certificate shows what has been struck and what is outstanding.
• Land tax. The trickiest line, covered below.
• Rent and bond. For a tenanted property, rent paid in advance is apportioned and the bond is transferred.

How does land tax get adjusted?

Land tax is assessed on whoever owns the land at midnight on 31 December, for the calendar year that follows. Whether and how it appears on your adjustment statement depends on the contract: the general conditions set out how land tax is treated, and the answer differs depending on whether the property is the vendor's principal residence, an investment, or part of a larger holding.

This single line generates more questions than any other, because a vendor with a large portfolio can have a land tax assessment far bigger than the property alone would attract. The contract's treatment of land tax is a standard checkpoint in a conveyancer's review, and it is a fair question to ask them directly: "how will land tax be adjusted for this purchase?"

A worked example

Say settlement falls exactly 100 days into a 365-day rating year, and the vendor has already paid the year's council rates in full. The vendor's share is 100 days, the buyer's share is 265 days, so the buyer's portion of the annual rates is added to the settlement figure, calculated to the day. Every line on the statement follows the same logic: identify the period, identify who paid, and square it up so each side has funded exactly their days of ownership.

The arithmetic is simple. The value is in checking the inputs: the right rating year, the right paid-to dates, a current owners corporation certificate, and a meter reading that actually happened.

Who checks all this?

Your conveyancer prepares or verifies the adjustments, and the other side agrees them before settlement. Buyers are not expected to audit the figures alone, but reading the statement line by line and asking about anything unfamiliar is entirely reasonable. The statement of adjustments is one of the few documents in the whole process where a small error turns directly into dollars, which makes it worth five minutes of your attention.

Summary

The statement of adjustments splits rates, water, owners corporation levies, land tax, and rent between vendor and buyer so each pays only for their period of ownership, calculated to the day of settlement. Land tax is the line with the most variation, and its treatment depends on the contract's general conditions. Your conveyancer manages the figures, and the final settlement amount includes them, which is why the number on the day rarely matches the contract price to the cent. For the surrounding process, our settlement day walkthrough covers what happens once the figures are agreed.

Sources

• Consumer Affairs Victoria: Property settlement: the regulator's guidance on settlement and adjustments.
• State Revenue Office Victoria: Land tax: how land tax is assessed and cleared, which drives the most variable adjustment line.

Sources verified 25 July 2026.