Land Tax Explained | The Complete NSW Buyer’s Guide

If you own an investment property, a holiday home or vacant land, NSW land tax could become a yearly cost. Many buyers don’t think about it until the first bill arrives.

This guide explains how NSW land tax works, who pays it, the current thresholds and rates, the main exemptions, and what land tax means for you when you buy a property.

NSW land tax at a glance

• Land tax is an annual tax collected by Revenue NSW under the Land Tax Act 1956 and the Land Tax Management Act 1956.
• It’s based on the unimproved land value, not the price you paid or the value of the house.
• Your bill is worked out on the land you own at midnight on 31 December each year.
• From the 2024 land tax year onwards, the general threshold is $1,075,000 and the premium threshold is $6,571,000.
• Your main home is usually exempt.
• Foreign owners of residential land pay a 5% surcharge from the 2025 land tax year, with no threshold.
• When you buy, check whether your contract says land tax is adjustable.

What is land tax in NSW?

Land tax is a state tax on the value of land you own in NSW. Revenue NSW collects it every year.

It’s not a one-off cost like stamp duty (transfer duty). You pay it for each year you hold taxable land above the threshold.

What is unimproved land value?

Unimproved land value is the value of the land alone, as if it were vacant. It ignores the house, pool, landscaping and other improvements.

The NSW Valuer General sets land values as at 1 July each year. Revenue NSW then uses a 3-year average of those values. This smooths out sudden jumps in value.

What is the taxing date?

Land tax is worked out on the taxable land you own at midnight on 31 December. This is called the taxing date.

The tax is then charged for the whole of the following year (the “land tax year”). For example, land you own at midnight on 31 December 2026 counts towards your 2027 land tax.

Your bill isn’t reduced if you sell part way through the year.

Who pays NSW land tax?

You may need to pay land tax if you own taxable land in NSW and its combined value is above the general threshold. Individuals, joint owners, companies and trusts can all be liable.

Your properties are added together

The threshold isn’t applied to each property on its own. Revenue NSW adds up the land values of all your taxable land.

That’s why one investment property may attract no land tax, but buying a second or third can push you over the threshold.

Joint owners

Land you own with someone else is assessed as if one person owned it. The co-owners share one threshold for that land.

Each owner is also assessed on their own share, plus any other land they own. You might get two notices. Revenue NSW gives a deduction so the same land isn’t taxed twice.

If you’re deciding how to hold title with someone, read our guide to joint tenants vs tenants in common.

Companies and trusts

Land held by a company or trust is usually taxable, even if someone lives there.

Some structures, such as special trusts (which include many discretionary trusts) and non-concessional companies, generally don’t get the general threshold. This means land tax can apply from the first dollar of land value.

Get advice before you choose how to own an investment property. Changing the structure later can be costly.

NSW land tax thresholds and rates

From the 2024 land tax year, the NSW Government fixed the thresholds. They no longer rise with land values each year.

The word “premium” has nothing to do with the type of property. It just means your total land value is above the premium threshold, so a higher rate applies.

Rates and thresholds can change in a state budget. Always check the current figures on Revenue NSW’s land tax thresholds and rates page.

How is land tax calculated? An example

Say your average taxable land value is $1,500,000.

• Average taxable land value: $1,500,000
• Less the general threshold: $1,075,000
• Amount above the threshold: $425,000
• Land tax: $100 + (1.6% x $425,000) = $6,900

Remember, this uses land value, not market value. A property worth far more than $1.5 million could have a land value of $1.5 million.

Who is exempt from land tax in NSW?

NSW has several exemptions and concessions. They aren’t always automatic. You may need to claim them through Revenue NSW’s Land Tax Online and keep evidence.

The principal place of residence exemption

Your principal place of residence (PPR) is the home you own and live in most of the time. It’s usually exempt from land tax. Key rules include:

• Only one PPR exemption is allowed per family.
• The land generally must be owned by a person, not a company or special trust (limited exceptions apply).
• From the 2026 land tax year, the people living in the home must together own at least 25% of it.
• You must use the home for residential purposes. Renting out one room or one flat (such as a granny flat) usually won’t affect the exemption.

Revenue NSW can review exemptions for past years. Keep proof such as utility bills and contents insurance in your name. Council rates notices are not accepted as proof. See Revenue NSW’s principal place of residence guide for full details.

Moving out, building or moving between homes

Concessions can keep the exemption in place in some situations:

• Moving out: you may keep the exemption for up to 6 years. You must have lived there for at least 6 months first and not own another PPR. You also must not lease it for more than 6 months in a calendar year, unless the income only covers basic costs like rates and water.
• Building or renovating: you may claim a concession for up to 4 years after you take ownership. You must then live there for at least 6 months once work is finished, and other conditions apply.
• Moving between homes: in some cases both homes can be exempt for one land tax year while you move.

Turning your home into a rental? Read our guide to converting your home into an investment property.

Other exemptions and concessions

• Land used for primary production, such as farming
• Land owned by eligible non-profit organisations with a charitable, educational or religious purpose
• Land used entirely as an approved childcare centre
• Operating retirement villages, aged care facilities and nursing homes
• Eligible boarding houses
• Eligible build-to-rent properties, which receive a 50% reduction in land value

Each one has strict conditions. Check them with Revenue NSW before you rely on one.

Do foreign owners pay extra land tax in NSW?

Yes. Foreign persons who own residential land in NSW pay surcharge land tax. The rate is 5% from the 2025 land tax year. It was 4% for 2023 and 2024.

No tax-free threshold applies. The surcharge is payable whatever the land value, on top of any ordinary land tax.

You’re generally a foreign person unless you’re an Australian citizen, or a permanent resident who lived in Australia for at least 200 days in the 12 months before 31 December. Some exemptions apply. Read Revenue NSW’s guide to surcharge land tax.

Is land tax adjustable when you buy a property?

When you buy, the contract says whether land tax is adjustable. The front page of the standard NSW contract for the sale of land has a box for this.

Adjustable land tax

Land tax is treated like council and water rates. You repay the seller for the land tax from settlement to 31 December. This adds to the money you need at settlement.

Under the standard contract, the adjustment is worked out on a single holding basis. This means as if the seller owned only this land. Higher rates caused by the seller’s other land, or by ownership through a special trust or non-concessional company, are ignored.

You pay the adjustment even if you would not be liable for land tax yourself.

Non-adjustable land tax

You don’t repay the seller anything for the current land tax year. This is usually better for buyers.

Either way, you only become liable from the next land tax year, based on what you own at 31 December.

Why unpaid land tax matters to buyers

Unpaid land tax is a charge on the land. This means the debt can stay with the property after it’s sold.

At settlement, the seller should provide a land tax clearance certificate (a section 47 certificate) and clear any land tax owing. Your conveyancer checks this for you.

Tips to manage your NSW land tax

• Work out your total land value before you buy another property.
• Choose your ownership structure carefully. It’s hard and costly to change later.
• Check your land value notices from the Valuer General. You can object if a value looks wrong, but strict time limits apply.
• Claim exemptions on time and keep good records.
• Remember land tax is state based. Property in other states is taxed under their own rules.

NSW land tax FAQs

Do I pay land tax on my own home?

Usually not. Your principal place of residence is generally exempt if you meet the rules.

Is land tax based on what I paid for the property?

No. It’s based on the unimproved land value set by the Valuer General, averaged over 3 years.

I sold my investment property in March. Do I still pay that year’s land tax?

Yes. Land tax is charged for the full year based on what you owned at 31 December. It isn’t reduced because you sold. If your contract made land tax adjustable, the buyer repays part of it at settlement.

Does the threshold apply to each property?

No. Revenue NSW adds together the land value of all your taxable land, then applies one threshold.

Need help buying property in NSW?

We can review your contract, explain any land tax adjustment and check the clearance certificate before you settle. Learn more about our conveyancing services for buyers.

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This article is general information only and is not legal advice. It reflects NSW law at the date of publication. Please contact us for advice about your circumstances.