In New South Wales, stamp duty (officially transfer duty) is a one-off tax paid when you buy property, while land tax is an annual charge on the unimproved value of land you already own. The land tax vs stamp duty question in NSW comes down to timing, what’s being taxed, and who ends up paying: buyers face stamp duty once at settlement, and owners face land tax every year their combined landholdings sit above $1,075,000.
The Core Differences at a Glance
Three things separate the two taxes.
Timing. Transfer duty is paid once, within three months of signing the contract or by settlement if that comes sooner. Land tax is billed every year, assessed on who owns the land at midnight on 31 December.
What’s taxed. Transfer duty is calculated on the property’s purchase price or market value, whichever is higher, and includes the building. Land tax ignores buildings and other improvements entirely. It applies only to the unimproved value of the land, using an average of the most recent three years’ valuations. A $1.5 million house might sit on land valued at $700,000 for land tax purposes.
Who pays. Transfer duty falls on the buyer. Land tax falls on the owner, year after year. If you buy a home to live in, you’ll pay stamp duty at purchase and no land tax at all, thanks to the principal place of residence exemption. Investors typically face both.
Buyers often focus on the stamp duty hit because it’s large and immediate, but over a long holding period the annual land tax bill can quietly become the bigger cost.
How Stamp Duty Is Calculated
Transfer duty is governed by the Duties Act 1997 and administered by Revenue NSW.1NSW Legislation. Duties Act 1997 It uses an ad valorem scale, so the rate rises with the property value. From 1 July 2025 the standard rates are:2Revenue NSW. Transfer Duty
- $0 to $17,000: $1.25 per $100 (minimum $20)
- $17,001 to $37,000: $212 plus $1.50 per $100 over $17,000
- $37,001 to $99,000: $512 plus $1.75 per $100 over $37,000
- $99,001 to $372,000: $1,597 plus $3.50 per $100 over $99,000
- $372,001 to $1,240,000: $11,152 plus $4.50 per $100 over $372,000
- Over $1,240,000: $50,212 plus $5.50 per $100 over $1,240,000
On a $900,000 home, that works out to roughly $34,912. Residential properties valued above $3,721,000 also attract a premium rate: from 1 July 2025 to 30 June 2026, the premium duty is $186,667 plus $7.00 for every $100 over $3,721,000, applied to the residential component only.3Revenue NSW. Premium Property Duty
Payment is due within three months of signing the contract, or by settlement if earlier.2Revenue NSW. Transfer Duty Late payment attracts interest and potential penalty tax.
How Land Tax Is Calculated
Land tax sits under the Land Tax Act 1956 and the Land Tax Management Act 1956.4NSW Legislation. Land Tax Act 1956 The taxable value is the three-year average of the unimproved land value.5NSW Land Registry Services. Land Value Search for Owners From 2025, the thresholds are permanently fixed:6Revenue NSW. Land Tax Thresholds and Rates
- Below $1,075,000: no land tax
- $1,075,000 to $6,571,000: $100 plus 1.6% of the value above $1,075,000
- Above $6,571,000: $88,036 plus 2% of the value above $6,571,000
The Revenue Legislation Amendment Bill 2024 froze both the general and premium thresholds, so they no longer index upward each year.7Revenue NSW. Preparing for the 2025 Land Tax Year That matters over time: as land values rise, more owners will drift over the $1,075,000 line without buying anything new.
If you own more than one property, Revenue NSW aggregates the land values across your holdings before applying the threshold. Investors holding several properties that individually fall below $1,075,000 can still owe land tax on the combined total.
Exemptions That Change the Answer
Principal Place of Residence
The main home exemption is what keeps most owner-occupiers out of the land tax net entirely. If you’re a natural person and you use and occupy the land as your principal place of residence, the land is exempt.8Revenue NSW. Land Tax Exemption for Principal Place of Residence You normally need to have occupied the property continuously since 1 July of the year before the 31 December taxing date, though Revenue NSW may still allow the exemption if you moved in later and are genuinely living there by 31 December.9Revenue NSW. The Principal Place of Residence Exemption
Companies and trusts don’t get this exemption. Primary production land and some specialised uses have their own exemptions.10Revenue NSW. Land Tax Exemptions and Concessions
First Home Buyers Assistance Scheme
On the stamp duty side, first home buyers pay no transfer duty on new or existing homes valued up to $800,000, and a reduced rate on a sliding scale between $800,000 and $1,000,000.11Revenue NSW. First Home Buyers Assistance Scheme At least one buyer must move in within 12 months of settlement and live there as their principal residence for at least 12 continuous months.12NSW Government. First Home Buyers Assistance Scheme
Traps Worth Knowing About
Discretionary Trusts Get No Threshold
Discretionary trusts, often used as family trusts for property investment, are classified as “special trusts” by Revenue NSW. Special trusts pay land tax from the first dollar of land value, with no tax-free threshold.13Revenue NSW. How Trusts Are Assessed for Land Tax A single investment property held in a discretionary trust will attract a land tax bill that the same property held individually would avoid. Fixed trusts, bare trusts, and superannuation trusts do get the standard $1,075,000 threshold.
Foreign Owner Surcharges
Foreign persons face surcharges on both taxes for residential property. A surcharge purchaser duty of 9% applies on top of standard transfer duty from 1 January 2025.14Revenue NSW. Surcharge Purchaser Duty On a $1.5 million apartment, that adds $135,000. A surcharge land tax of 5% of the land value applies annually from 2025, on top of any standard land tax, and can still apply even where the property would otherwise be exempt from regular land tax.15Revenue NSW. What Is Surcharge Land Tax
The Closed First Home Buyer Choice Scheme
Between January and June 2023, first home buyers could choose an annual property tax instead of upfront stamp duty. Owner-occupiers paid $400 plus 0.3% of the land value each year; investors paid $1,500 plus 1.1%.16Revenue NSW. First Home Buyer Choice The scheme closed to new applicants on 1 July 2023, and the choice made by those who opted in is irrevocable. If you’re buying from someone who opted in, the annual property tax obligation stays attached to the land, so it’s worth confirming before you sign.