Land Tax NSW 2026
NSW Land Tax 2026. Who Pays, Rates & Thresholds
Whether you own an investment property, commercial premises, vacant land or property in a trust, understanding NSW land tax rules in 2026 is essential for strategic financial planning and property investment decisions.
What Is Land Tax in NSW?
Land tax is an annual state-based tax levied on the unimproved land value of property you own as at 31 December each year.
In NSW, land tax is administered by Revenue NSW and applies primarily to:
- Investment properties (residential rental properties)
- Commercial properties (offices, retail, industrial)
- Vacant land (undeveloped blocks)
- Property held in trusts or companies
Your principal place of residence (PPOR) is generally exempt from land tax for owner-occupiers.
NSW Land Tax Thresholds and Rates for 2026
For the 2025–26 land tax year (based on land owned at 31 December 2025), the key thresholds are:
- Tax-free threshold: $1,075,000
- Premium threshold: $6,571,000
Standard Land Tax Rate Calculation:
$100 plus 1.6% of land value above the threshold
Premium Land Tax Rate:
$88,036 plus 2% of land value above the premium threshold
(Thresholds are indexed annually. Figures may adjust each year slightly based on NSW Government policy.)
Who Pays Land Tax in NSW in 2026?
Individual Investment Property Owners
If you own an investment property in NSW and the combined land value of all taxable properties exceeds the threshold, you will pay land tax.
Example: Emma owns an investment unit in Wollongong with a land value of $900,000 and a vacant block worth $400,000.
- Total taxable land value = $1,300,000
- Threshold = $1,075,000
- Taxable amount = $225,000
- Land tax payable ≈ $100 + 1.6% of $225,000 = $3,700 (approx.)
Property Held in a Trust and Land Tax
Trusts are treated differently for land tax purposes.
Most discretionary trusts do not receive the tax-free threshold, unless they qualify as fixed trusts and make a threshold election.
This means land tax may apply from the first dollar of land value for properties held in discretionary trusts.
Example: A family trust owns a rental property with a land value of $850,000.
If no threshold applies, land tax is calculated from $0, increasing annual holding costs significantly.
Trust structuring is therefore critical for land tax efficiency.
Companies and Land Tax
Companies generally receive the standard land tax threshold. However, grouping rules may apply if related entities hold property, potentially combining land values across multiple entities.
Foreign Owners and Absentee Land Tax Surcharge
Foreign owners and absentee landlords may be subject to:
- Land tax surcharge (currently 4% in NSW)
- Stamp duty surcharge on purchase
When Is Land Tax Paid? Critical Timing Rules
Land tax is assessed annually based on land ownership at midnight on 31 December.
Notable timing points:
- You do not pay land tax at property settlement
- If you sell in January, you may still receive the full land tax assessment for that year
- Adjustments are often made between buyer and seller at settlement
- Planning around 31 December ownership can be strategically relevant
Example: Why December 31st Matters
James settles on a new investment property on 29 December 2025. Two days later, at midnight on 31 December, he officially becomes liable for the 2026 land tax assessment on that property, despite owning it for just 48 hours of the year.
Meanwhile, his friend Lisa settles on an identical property on 3 January 2026. She won't be assessed for land tax until the following year (2027), saving her approximately $3,500-$5,000 in immediate holding costs by settling on her property four days later.
How Land Tax Impacts Different Property Owners
Land tax directly affects:
- Rental yield and net property returns
- Cashflow modelling for investment properties
- Structuring decisions (personal ownership vs trust vs company)
- Long-term hold strategies and portfolio growth
- Development feasibility calculations and project viability
For investors with multiple properties, especially in NSW areas such as Wollongong, Sutherland or Sydney, the combined land value can escalate quickly.
Land tax is often the "silent cashflow eroder" that reduces net return without investors realising its cumulative impact.
Strategic Land Tax Planning for 2026
Smart property investors should:
- Review land values annually (Revenue NSW issues updated valuations)
- Model cashflow including land tax, not just mortgage repayments
- Consider the structure before purchasing additional property
- Assess whether trusts are still appropriate given threshold limitations
- Understand grouping rules across related entities
- Time purchases strategically around 31 December if relevant
Land tax is predictable and manageable, but only if you plan for it proactively.
Frequently Asked Questions About NSW Land Tax 2026
Do I pay land tax on my family home in NSW?
No. Your principal place of residence (PPOR) is generally exempt from land tax in NSW, provided it meets eligibility requirements and is your primary home.
When is land tax calculated in NSW?
Land tax is calculated based on land ownership as at midnight on 31 December each year. This means the properties you own on that specific date determine your land tax liability for the following year.
Do trusts pay land tax differently?
Yes. Most discretionary trusts do not receive the general land tax threshold unless specific elections are made, meaning land tax may apply from the first dollar of land value. This can significantly increase holding costs for properties in family trusts.
Is land tax tax deductible for investment properties?
Yes. For investment properties, land tax is generally tax-deductible against rental income as a property expense, reducing your overall tax liability.
How can I reduce land tax legally in NSW?
Strategic structuring decisions, reviewing ownership entities before purchase, understanding grouping rules, and timing acquisitions appropriately can help manage land tax exposure. Professional advice from a financial planner or accountant is essential for tax-effective strategies.
What happens to land tax when I sell a property?
Land tax is assessed based on ownership at 31 December. If you sell after this date, you may still be liable for the full year's land tax, though adjustments are typically negotiated at settlement between buyer and seller.
How does land tax affect property investors with multiple properties?
Multiple property owners in NSW face aggregated land value calculations. If your combined unimproved land values exceed $1,075,000, you'll pay land tax on the excess amount. This can significantly impact cashflow for portfolio investors.
Managing Land Tax in Your Property Strategy
At Cashflow Financial, we assist property owners across NSW, especially Wollongong, Sutherland and Greater Sydney to model land tax impact, review ownership structures and align property investment strategy with long-term wealth goals.
If you are considering purchasing property or expanding your portfolio in 2026, we recommend reviewing the land tax implications before you sign a contract.
Contact us today to discuss how land tax affects your property investment strategy.