Understanding Land Tax in NSW: What Every Property Investor Should Know
If you own an investment property in New South Wales, land tax is one of those less-glamorous but essential parts of property ownership to keep on your radar. It doesn’t apply to everyone, but when it does, it can make a noticeable difference to your annual expenses — so it’s worth understanding how it works and whether you might be affected.
What is Land Tax?
Land tax is a state-based tax calculated on the value of the land only, not the buildings on it. In NSW, this value is determined by the Valuer General each year based on the unimproved land value.
The tax is assessed as at midnight on 31 December, so whatever land you own on that date determines whether you’re liable for the following year.
The Thresholds for 2025
For the 2025 land tax year, the general threshold sits at $1,075,000. This means if the combined land value of all your taxable properties in NSW falls below that figure, you won’t pay land tax.
If your total exceeds that amount, tax applies only to the value above the threshold. There’s also a premium threshold — currently $6,571,000 — which attracts a higher rate.
Land Value (Aggregate) | Rate |
$0 – $1,075,000 | Nil |
$1,075,001 – $6,571,000 | $100 + 1.6% of the value above $1,075,000 |
Above $6,571,000 | $89,856 + 2% of the value above $6,571,000 |
(These figures are reviewed annually, so it’s always wise to double-check before the end of the year.)
What Properties Are Exempt?
Your principal place of residence is generally exempt, as is land used for primary production. Other exemptions can apply for charitable institutions, boarding houses, and retirement or aged-care facilities.
Even if your property is undergoing construction or renovation with the intention of becoming your main home, you may be eligible for a temporary exemption.
Common Scenarios for Property Investors
Many landlords find themselves liable for land tax once they purchase a second property — particularly around Sydney’s Northern Beaches, Lower North Shore, or Eastern Suburbs, where land values are high.
It’s also worth noting:
- Apartments usually attract less land tax because the land component is shared among all owners.
- If you own multiple investment properties, the aggregated land value across all holdings is used.
- Trusts and companies are assessed differently, so professional advice is essential before changing ownership structures.
How and When You’ll Be Notified
The NSW Revenue Office issues assessment notices early each year. Payment can be made in full or through an instalment plan. If you think your assessment is wrong — for example, if the valuation seems too high or you believe your property should be exempt — you can lodge an objection.
Why It Matters for Long-Term Strategy
Land tax is not a deal-breaker, but it’s a key consideration in your investment planning. Factoring it into your cash flow helps avoid surprises and gives a clearer picture of your property’s true holding costs.
When comparing suburbs or types of property, consider how the land component influences not just your tax but your potential for capital growth.
The Bottom Line
Owning property in NSW continues to be a solid long-term investment, but understanding your land tax obligations helps you plan more effectively and avoid surprises.
At Rightside, our focus is on helping landlords maximise the return on their investment through proactive management, careful tenant selection, and a clear understanding of all the factors that impact property performance — land tax included.
If you’d like expert guidance on how to make your investment work harder for you, our local team is always here to help.
