KEY TAKE-OUTS:
- What is Land Tax?
- How is Land Tax calculated?
- 2025 Land Tax thresholds
- Changes for foreign investors
- Common misconceptions about Land Tax
What is Land Tax?
Land Tax is an annual tax charged on the land value of all the property you own that is over and above the land tax threshold. Notwithstanding this, your principal place of residence is usually exempt and not taken into consideration when determining your land tax liability.
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Do you own more than one property?
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Have you acquired a property in the last 12 months?
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Do you own property and are about to purchase another?
You’d better read on…
How is Land Tax Calculated?
Land Tax is calculated on the total value of all your taxable land above the threshold, as of 31 December each year. If the combined value of your land does not exceed the threshold, then you do not need to pay land tax.
The thresholds are applied as follows:
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General threshold: $100 plus 1.6% of the land value above the threshold, up to the premium threshold
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Premium threshold: $88,036 plus 2% of the land value above the threshold
If you are a foreign person, in addition to any land tax you may be required to pay, you must also pay surcharge land tax. If you are a foreign person who doesn’t pay land tax, you may still be required to pay the surcharge. Despite this, certain VISA holders are eligible for exemptions or concessions from surcharge land tax.
NSW Land Tax Calculator
Revenue NSW has an online calculator which you can use for free to estimate the amount of your land tax liability and surcharge, if applicable. See https://www.apps09.revenue.nsw.gov.au/erevenue/calculators/landtax.php
Your liability for each year is based on the value of all the land you owned on 31 December in the previous year. As such, any changes to the land you own this year (sale of an existing property or purchase of another property) will only affect how much you pay next year.
2025 Land Tax Thresholds
The Land Tax thresholds for 2025 are as follows:
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General threshold: $1,075,000
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Premium threshold: $6,571,000
Does this sound familiar to you? If it does, that’s because these thresholds haven’t changed. They are the same thresholds that applied in 2024. In the past, we saw the thresholds increase each year – the 2022 general threshold was $822,000, which increased to $969,000 in 2023. The reason behind this was to reflect rising property values or inflation, helping to ensure that modest investors remained below the threshold in an escalating market. But, the 2024 thresholds have been frozen as part of the 2024-2025 state budget. With these thresholds now frozen, land tax is likely to impact a growing number of property owners, as property values increase. Even if your property portfolio stays the same, increasing valuations over time will likely mean more investors will start paying land tax and be pulled into the land tax net.
Why was this change implemented as part of the 2024-2025 state budget? That is a great question and one I am sure we are all asking. The government shifted to fixed thresholds to increase taxation revenue stability and better fund housing and infrastructure initiatives.
Changes for Foreign Investors
From 1 January 2025, the following changes applied to foreign investors:
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The foreign investor duty surcharge increased from 8% to 9%; and
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The land tax rate for foreign property owners increased from 4% to 5%.
The 1% increase might not sound like much, but when it’s estimated that there are 20,000 foreign-owned residential properties in NSW, the changes are expected to generate significant additional revenue. The NSW government predicts this may also free up more properties for local residents.
It’s important to note that these changes apply to all foreign-owned residential properties in NSW, even those not subject to land tax.
How is Land Value Determined?
The NSW Valuer General provides unimproved land values as of 1 July each year. This is a valuation of the land itself, excluding any buildings or structures. Revenue NSW then uses a 3-year average of the land values for land tax purposes.
More information about land values used to calculate tax is available on the Revenue NSW website, including examples of how this applies. See https://www.revenue.nsw.gov.au/taxes-duties-levies-royalties/land-tax/understanding-land-tax/how-land-tax-is-calculated.
What if I sell a property part way through the year?
Land tax is applied for the full year following the taxing date of 31 December, and no pro-rata calculation applies, nor any refund for the period between selling the property and the end of that calendar year.
Despite this, you may be able to recoup a portion of your land tax from the Purchaser at completion of the sale, if the Contract provides for this. You should discuss this with your Conveyancer when you instruct them to prepare a Contract for the sale of the property.
What do I do If I think I May Be Liable to Pay Land Tax?
It is your responsibility to register for Land Tax if the value of all your taxable land is above the threshold. It is not the responsibility of Revenue NSW to notify you that you are required to be registered and/or follow up on payment. This is the case even if you haven’t received a notice of assessment from them. If you haven’t received a notice of assessment, you can register online or phone Revenue NSW.
Failure to register for land tax may result in penalties such as interest charges.
The Most Common Misconception About Land Tax…
You only have to pay land tax on properties you earn an income from. This is not the case. Land tax applies regardless of whether income is earned from the land and applies not only to investment properties but also to holiday homes and vacant land.
Reminder: Important changes to the principal place of residence exemption
From 1 February 2024, if you own and occupy a property but own less than a 25% interest in it, you will not be entitled to the principal place of residence exemption from the 2025 land tax year onwards.
For example, you own a property with your parents and 2 siblings as tenants in common in equal shares (i.e. each of you owns a 20% share of the property). You live in the property. You don’t pay land tax. From this 2025 land tax year, you may be liable to pay land tax on the property even though you hadn’t in the past.
ABOUT MELINA MAIOLO

Melina joined the Coutts team in 2010 working as a Licensed Conveyancer within our Property & Conveyancing team, based out of our Campbelltown office. Her commitment to client services saw her progress further and into the role of a Senior Licensed Conveyancer in July 2022.
She graduated with a distinction in the Advanced Diploma of Conveyancing and is accredited with the Australian Institute of Conveyancers NSW.
For further information please don’t hesitate to contact:
Melina Maiolo
Senior Licensed Conveyancer & JP
info@couttslegal.com.au
1300 268 887
This blog is merely general and non-specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.