NSW Land Tax Surcharge Exemptions for Developers

NSW land tax assessments for 2027 will be issued in January and February 2027. For property owners with foreign shareholders or investors in their ownership structure, it is worth checking the assessment carefully.

A surcharge may apply where an entity is treated as a foreign person, but there are exemptions that may be available in some development and build-to-rent projects.

This is particularly relevant to development sites held through companies or joint ventures. The fact that the business and the development are based in Australia does not, by itself, prevent the foreign ownership surcharges from applying.

What surcharges can apply?

NSW has two surcharges relevant to foreign ownership of residential land:

Surcharge	Rate	Applies when
Duty surcharge (on purchase)	9%	On top of standard stamp duty, when a site is bought by an entity treated as foreign
Land tax surcharge (annual)	5%	Each year the land is held by an entity treated as foreign, on top of ordinary land tax

The rules can also catch Australian companies and joint venture structures. For example, a company may be treated as a foreign person where a foreign shareholder has a 20% or greater interest, or where foreign shareholders collectively hold a 40% or greater interest.

Exemptions for development projects

There are exemptions that may reduce or remove these surcharges where the land is being developed for new housing.

The developer exemption can apply to land being used to build and sell new homes, as well as land that has been subdivided and sold for new home construction. Depending on the circumstances, it can provide an exemption from the duty and land tax surcharges or allow surcharge already paid to be refunded.

The exemption is not automatic. An application needs to be made to Revenue NSW and supported by evidence that the relevant requirements have been met. There are also time limits, including deadlines linked to the completion of the sale or subdivision.

For developers with multiple sites or joint venture arrangements, it is therefore worth checking the position for each property rather than assuming that the same treatment applies across the portfolio.

Build-to-rent projects

A separate exemption is available for qualifying build-to-rent projects.

Broadly, the rules cover developments with 50 or more self-contained dwellings held under unified management, subject to other requirements. Eligible projects can receive an exemption from the duty and land tax surcharges for the period of the concession, currently legislated through to 2040. A 50% reduction in the land value used to calculate land tax may also apply.

Further changes affecting build-to-rent and retirement village projects have been proposed from 1 July 2026. These changes have not yet been finalised and should be checked before relying on them.

The timing is important

An exemption does not simply continue without conditions. The requirements need to be met both when the exemption is sought and, in some cases, throughout the relevant period. For example, changes to the use of the land or selling the property before construction or subdivision is complete can affect the exemption.

The timing of the land tax assessment also matters. Once an assessment is issued, there is only a limited period in which to review it and lodge an objection if the assessment is incorrect.

We recently assisted a client in obtaining an exemption that saved several hundred thousand dollars in surcharge liability. The issue was identified by reviewing the client’s ownership structure and confirming that the relevant exemption was available.

What should you do now?

If you own NSW development land through a company or joint venture, now is a good time to review the ownership structure and the treatment of each property for land tax purposes.

In particular, it is worth checking:

whether the entity holding the land is treated as a foreign person;
whether duty or land tax surcharges have been paid or assessed;
whether a developer or build-to-rent exemption may apply; and
whether any application or objection needs to be made within a particular timeframe.

Our tax lawyers can review your NSW landholdings and ownership structures, identify any potential surcharge exposure and advise on whether an exemption or objection may be available. Where appropriate, we can also prepare and lodge the relevant application with Revenue NSW and manage the process on your behalf.

Disclaimer: This article provides a general summary based on the law and Revenue NSW guidance current as at the date of publication. It is not legal or tax advice and should not be relied on as such. The availability of any exemption depends on the specific facts, ownership structure and circumstances of each project.