Australia’s New South Wales (NSW) government announced an increase in the foreign purchaser duty surcharge and foreign owner land tax surcharge for 2025.

From 1 January, 2025, the foreign purchaser duty surcharge will increase from 8% to 9%. From the 2025 land tax year, the foreign owner land tax surcharge will also increase from 4% to 5%.

There are an estimated 20,000 foreign-owned residential properties in NSW, which is equivalent to around 0.6 % of the state’s stock of properties.

The increase is expected to encourage more properties to be made available to NSW residents and ensure that overseas investors buying homes in NSW contribute to the cost of building other houses and the necessary infrastructure to support them.

The foreign owner land tax surcharge was introduced in 2017 by the then Treasurer Gladys Berejiklian. It was increased to 2% from 2018 and 4% from 2023.

The foreign purchaser duty surcharge was introduced on 21 June, 2016 at 4%. It was increased to 8% from 1 July, 2017.

The NSW Government is also announcing today that the land tax thresholds will be increased for the 2024 land tax year as planned, and then maintained at that level going forward. This applies to both the tax-free threshold and the premium rate threshold.

The adjustment brings NSW in line with most other Australian states. South Australia is the only other state to index land tax thresholds. The NSW tax-free threshold will remain around 50 % higher than the next nearest state.

This will take effect from the 2025 land tax year and be subject to periodic review.

These measures are expected to return additional revenue of approximately $1.68 billion over the next 4 years, funds which will be directed to addressing the housing crisis.