NSW land tax update: thresholds frozen and tighter PPR exemption rules

Land tax thresholds and rates: the 2024 settings are now “locked in”

Land tax is assessed against the combined value of your taxable land in NSW. For the 2024 land tax year, the key thresholds are:

• General threshold: $1,075,000
• Premium threshold: $6,571,000

The NSW Government has announced these thresholds will remain at the 2024 levels for the 2025 and subsequent land tax years (in other words, the thresholds are frozen rather than increasing with land values). This matters because as land values rise over time, more owners can be pulled into land tax, and existing land taxpayers can drift into higher bills even without purchasing additional property.

How the general and premium rates are calculated

Once your total taxable land value exceeds the general threshold, land tax is calculated using the following formulas:

• General threshold rate: $100 plus 1.6 per cent of the land value above $1,075,000, up to the premium threshold.
• Premium threshold rate (2024 land tax year): $88,036 plus 2 per cent of the land value above $6,571,000.

For context, the premium base amount was $79,396 in the 2023 land tax year, increasing to $88,036 for the 2024 land tax year.

A simple worked example

Assume an individual has a combined taxable land value of $1,500,000 in NSW. This is above the general threshold but below the premium threshold. The land tax calculation would be:

• Land value above the general threshold: $1,500,000 − $1,075,000 = $425,000
• General-rate land tax: $100 + (1.6% × $425,000) = $100 + $6,800 = $6,900

If the combined taxable land value exceeds $6,571,000, the premium formula applies to the amount above the premium threshold, which can materially increase the annual land tax payable for higher-value landholdings.

Principal place of residence exemption: a new 25% minimum ownership rule

The PPR exemption is one of the most important land tax protections for homeowners, because it can exempt your home from land tax where the eligibility requirements are met. From 1 February 2024, NSW introduced a minimum ownership requirement for the exemption: to qualify, the residents living in the property must hold a total ownership interest of at least 25%.

From the 2026 land tax year onwards, all owners must meet the updated 25% ownership requirement to keep claiming the PPR exemption.

Transitional arrangements: what happens if you already claim the exemption?

Transitional provisions may apply where the PPR exemption was already being claimed before the rule change. In broad terms:

• If you were already claiming the PPR exemption but your ownership interest is less than 25%, you may be able to continue claiming the exemption for the 2024 and 2025 land tax years.
• From and including the 2026 land tax year, you may become liable for land tax unless your ownership is adjusted so that the residents’ combined interest is at least 25%.

It is also important to note that, depending on your circumstances (including when you purchased and first claimed), you may be affected earlier than 2026. If you are unsure which rules apply to you, obtain tailored advice before making changes.

What you can do now

If you own multiple properties, hold property with family members, or are buying with an ownership split (for example, 99/1 or similar), these changes make it essential to review your structure and likely land tax position. A proactive check can help you avoid surprise assessments and allow time to adjust ownership arrangements (where appropriate) before the 2026 land tax year.

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General information only. This article is not financial or tax advice. Consider obtaining advice specific to your circumstances.