Untangling NSW Land Tax

For property owners and investors in New South Wales, land tax is a silent pressure point that often undermines the profitability of a portfolio. Unlike one-off taxes such as stamp duty or capital gains tax, land tax is a recurring annual expense that compounds over time, quietly diminishing returns but offering options for strategic intervention.

We believe the proper structure is the key to protecting your assets and unlocking long-term value. Land tax doesn’t have to be an unavoidable drain. By understanding how the legislation works and expertly optimising your ownership structures, you can legally reduce your liability while safeguarding your wealth for future growth.

Untangling the NSW Land Tax Landscape

New South Wales imposes a land tax on property owners whose total taxable land value exceeds the state’s threshold as of 2025, with rates as follows:

Threshold	Land value	Rate
General	More than $1,075,000 but less than $6,571,000	$100 + 1.6% of the land value above $1,075,000
Premium	More than $6,571,000	$88,036 + 2% of the land value above $6,571,000

Unlike Queensland, discretionary trusts in NSW don’t benefit from a tax-free threshold unless specially structured as fixed or unit trusts, a critical detail that illustrates the state’s nuanced rules. This can lead to significant setbacks for owners who mismanage their portfolio’s structuring or unintentionally aggregate properties under the same entity.

When left unchecked, crossing the threshold means thousands, if not tens of thousands, in land tax payments every year for property owners. But complexities are opportunities in disguise. Strategic planning can help you reduce your exposure and preserve your portfolio’s full earning potential.

The Aggregation Challenge: Why Structuring Matters

One of the most common pitfalls for NSW property owners is aggregation. Land tax is calculated on the total taxable value of land owned across all properties under a single ownership entity, whether that’s your personal name, a corporation, or a trust. Without careful planning, this can escalate costs quickly.

Consider this scenario:

You own three properties in NSW, each with a taxable land value of $700,000. If held in your personal name, the combined taxable value exceeds the land tax threshold by a significant margin, triggering annual payments that eat into your returns:

• Land value per property: $700,000

• Combined taxable value: $2.1M

• Annual land tax: ~$16,500

  
  

By distributing these properties into three appropriately structured trusts (e.g., fixed/unit trusts), each property can operate independently, reducing aggregated taxable value and optimising land tax thresholds. This approach could save thousands annually, though such planning needs to be tailored to NSW-specific laws for compliance and maximum efficiency.

The Strategic Toolkit for Success

Our goal is to design solutions that empower NSW property owners to achieve clarity and control over land tax obligations. Effective structuring hinges on understanding the tools available and their application to your unique portfolio.

Here’s how different ownership structures can work for you:

Ownership Option	Key Benefits	Considerations
Individual Ownership	Access to $1,075,000 threshold; ideal for single, smaller investments.	Aggregation risks for multiple properties under one name.
Fixed/Unit Trusts	Retain tax-free thresholds in NSW while facilitating asset flexibility.	Requires meticulous legal setup; higher compliance standards.
Discretionary Trusts	Valuable for estate planning and asset protection.	No threshold access in NSW unless tailored as fixed trust.
Corporate Ownership	Effective segregation for trading properties or developments.	Additional setup costs and administrative considerations.

Understanding which structure suits your stage of investment, not just your immediate needs, is critical to balancing compliance, cost management, and scalability.

Forward-Looking Tax Planning

Land tax is not just a cost you account for; it’s a challenge you solve. We provide the expertise needed to align your ownership structures with NSW-specific legislation, ensuring your portfolio operates efficiently and sustainably.

If you’re considering adding properties, optimising your existing holdings, or want to stay ahead of your tax obligations, now is the time for action. Let’s collaborate to assess your exposure, mitigate annual losses, and position your portfolio for meaningful growth.

MazzCorp Partners specialises in strategic, forward-thinking solutions designed to help NSW property owners navigate complex challenges, such as land tax. Together, we’ll turn obstacles into opportunities and ensure your property investments deliver the results you deserve.

Interested in taking charge of your land tax exposure?

Let's Talk

Anthony Mazza

Director