When Is Land Tax Payable in NSW?

Land tax is an annual charge on the land you own in New South Wales, excluding your principal place of residence, worked out from what you owned on one specific date rather than across the year as a whole.  Not everyone realises they are supposed to register for Land Tax and so often a land tax liability is not realised until it is time to sell and your conveyancer explains that a clearance certificate is required.

What Is Land Tax and Who Pays It in NSW?

Land tax in NSW is an annual tax on the combined unimproved land value of all the non-exempt land you own in the state. Liability sits with the owner of the land, whether or not that land earns any income, so a vacant block is assessed on the same basis as a tenanted investment property.

Ownership, not occupation, decides who pays land tax in NSW. Land tax NSW assessments go to the owner of the land, and Revenue NSW assesses individuals, joint owners, companies, trustees and lessees of Crown land, each under the rules for that type of owner. 

If you are thinking of the one-off tax charged when a property changes hands, that is a different charge. Learn more about stamp duty in NSW, who pays it and when it falls due.

When Is Land Tax Payable?

Ownership is assessed at midnight on 31 December each year, and that snapshot determines liability for the land tax year that follows. If you hold non-exempt land at that moment, the following year's assessment is yours. If the sale settles on 30 December, that land does not form part of your assessment for the following year.

Revenue NSW starts issuing assessment notices from January each year. You then have 60 days from the issue date printed on your notice to pay the assessment in full or to set up an interest-free payment plan.

Payment in full before the due date shown on the notice attracts a 0.5% discount, excluding any past interest or penalties. Interest-free payment plans run over 3, 6 or 9 months, with fortnightly or monthly payments, and the balance may be paid out in full at any point while a plan is active.

Thresholds, Rates and How Land Tax Is Calculated

Land tax applies only once the total taxable land value you hold passes a threshold. 

• The general threshold is $1,075,000, and land tax is then charged at $100 plus 1.6% of the land value above that figure. 
• The premium threshold is $6,571,000, and land tax at that level is charged at $88,036 plus 2% of the land value above it.

Both thresholds were frozen under the 2024-25 NSW Budget for land tax years after 2024, so they no longer rise each year the way they once did. A frozen land tax threshold in NSW does not move with land values, which means a rise in your own land value can bring you over the threshold even though the threshold itself has not changed.

The value used is not the price your property would sell for. The NSW Valuer General determines the land value of every parcel in NSW as at 1 July each year, and Revenue NSW then applies a three-year average of those values to work out an assessment. Because that average runs across three years, a single sharp rise in land value continues to affect your assessment for up to three years afterwards.

Surcharge land tax is a separate charge that may apply to residential land owned by foreign persons. It has rates of its own, and the general and premium thresholds do not apply to it, so an owner in that position should confirm the figures with Revenue NSW or their adviser rather than working from the ordinary land tax rates above.

Which Land Is Exempt From Land Tax?

Many homeowners never receive a land tax notice, and the principal place of residence exemption is usually the reason. The land you own and live in as your main home may be exempt, which takes it out of the total Revenue NSW assesses. From the 2026 land tax year, the people living in the property must together hold at least a 25% ownership interest in it for that exemption to apply.

A primary production exemption may also apply where the dominant use of the land is primary production carried on with the purpose of making a profit. Further land tax exemptions in NSW exist for land used for purposes such as boarding houses, aged care, childcare, caravan parks and certain non-profit organisations, each with conditions of its own.

The residence exemption covers one home, not a second property. A holiday home, an investment property or a vacant block held for later does not qualify, so its full land value counts towards your threshold, which is how an owner who has never paid land tax can receive a first assessment after buying a second property. 

Land Tax When You Buy or Sell a Property in NSW

Unpaid land tax does not simply follow the person who owed it. Revenue NSW treats it as a first charge on the land, ahead of other liabilities attached to the property, so a buyer who settles while an amount is outstanding can become responsible for it, including interest and penalties. A land tax clearance certificate in NSW issued under section 47 of the Land Tax Management Act 1956 is what protects a buyer from that, which is why it belongs on the checklist for anyone buying property in NSW.

That risk arises only where settlement goes ahead with the amount unresolved. A buyer who discovers a land tax liability during the purchase is not expected to absorb it because settlement is arranged so the amount is cleared before the property transfers, commonly out of the sale proceeds.

The certificate is obtained through the seller's solicitor or conveyancer rather than by the seller directly, using one of the service providers approved by Revenue NSW, and it is generally issued immediately unless an error needs investigating. It must then reach the buyer at least 14 days before settlement. 

A clear certificate shows no land tax owing, while a certificate issued with a charge means the seller needs to arrange its release first, commonly by paying the assessment or by providing a settlement letter. The certificate must also be current, which means it must be issued for the year the settlement occurs in, or no more than three months before the date it is due to the buyer.

Settlements in January and February need particular attention because Revenue NSW allows an early assessment notice to be requested for those months and the request has to go in ahead of time. If you would like the land tax position confirmed before it affects your settlement date, you can request a quote for your purchase or sale.

How a Conveyancer Helps With Land Tax at Settlement

At Paul Denny Conveyancing, we order and review the section 47 clearance certificate as part of the settlement file, confirm the adjustment position in the contract before exchange, and address an unpaid liability while there is still time to act on it. Where a certificate comes back with a charge, the amount is commonly paid out of the sale proceeds at settlement so the charge is released before the property transfers.

If land tax has come up in your purchase or sale, speak with our NSW conveyancing experts. We handle the land tax steps in the transaction so the certificate and the adjustment position are in order well before completion.

Frequently Asked Questions

What happens if the clearance certificate shows unpaid land tax?

The unpaid amount has to be cleared before settlement, and arranging that is the seller's responsibility. Unpaid land tax is a first charge on the land, so the charge can pass to the new owner if settlement proceeds while it is outstanding. In most transactions, the seller pays the assessment and obtains a clear certificate, or provides a settlement letter from Revenue NSW so the amount is paid out of the sale proceeds on the day.

Do I pay land tax if I only owned the property for part of the year?

Yes, if you owned it at midnight on 31 December. Revenue NSW does not apportion an annual assessment across part-year ownership, so an owner who sells in February still carries the full assessment for that land tax year. A buyer who settles in February is generally not assessed on that land until the following year, provided the land is still theirs at the next 31 December.

Is land tax adjusted between the buyer and seller at settlement?

That depends on the contract for sale rather than on any rule set by Revenue NSW. The front page of the standard NSW contract states whether land tax is adjustable, and the usual position in residential sales is that it is not. Check that box and clause 14 before assuming either way, since an adjustment is more often negotiated on investment and commercial sales.

Do I need to register for land tax myself, or will Revenue NSW contact me?

The obligation sits with the owner. Landowners liable for land tax or surcharge land tax are required to keep their land and contact details up to date with Revenue NSW, which means lodging a return through Land Tax Online where you believe you are liable and no assessment notice has arrived. Owners who update their details before Revenue NSW begins an investigation may avoid interest or penalty tax, so registering is the safer course.

‍