To ensure more housing for more people, the New South Wales (NSW) government will increase the foreign investor surcharge from 8% to 9% starting January 1, 2025. The land tax surcharge for foreign owners will also increase from 4% to 5% starting in 2025. It is estimated that there are approximately 20,000 foreign-owned residential properties in NSW, accounting for approximately 0.6% of the state's total properties.
The tax increase is expected to encourage more property supply to NSW residents, while ensuring that overseas investors who purchase property in NSW also contribute to the cost of housing construction and the necessary infrastructure.
The foreign owner land tax surcharge was introduced by then-treasurer Gladys Berejiklian in 2017 and increased to 2% in 2018, and to 4% from 2023. The foreign homebuyers surcharge was introduced on June 21, 2016, starting at 4%, and increased to 8% on July 1, 2017.
The Labor government says it has found the right balance between the benefits of foreign investment to the community and ensuring those investors contribute to housing and infrastructure across NSW.
Land tax threshold raised
The NSW Government also announced today that the land tax thresholds for the 2024 land tax year will increase as planned and remain at that level going forward. This applies to both the tax-free and premium rate thresholds.
This adjustment brings NSW in line with most other Australian states. South Australia is the only other state to have indexed its land tax threshold. NSW's tax-free threshold will continue to remain approximately 50% higher than the next closest state.
Generating income to address the housing crisis
The measures will come into effect from the 2025 land tax year and will be reviewed regularly. It is expected that these measures will generate approximately $1.68 billion in additional revenue over the next four years, which will be used to address the housing crisis.
This is part of the Labour Government's plan to build better, stronger communities for NSW. Treasurer Daniel Mookhey said: "These are modest adjustments made in the context of a housing crisis that has lasted for a generation. The Government has been honest with NSW residents that we will do everything we can to address the housing crisis and build the homes NSW residents need. The Labour Government is building the future to ensure our children and grandchildren can continue to call NSW home."
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