Build to rent

Preamble/Background

1. The State Revenue Legislation Amendment (COVID-19 Housing Response) Act 2020 received assent on the 11^th of August 2020 and commenced from that date ('time limited scheme'). The Land Tax (Build-to-rent Concessions) Amendment Act 2025 received assent on the 23rd of September 2025 and commenced from that date ('general scheme').
2. The Duties Act 1997 ('Duties Act'), the Land Tax Act 1956 ('LTA') and the Land Tax Management Act 1956 ('LTMA') were amended to provide:
   1. a land tax concession to apply until 2040 for the time limited scheme and an ongoing land tax concession for the general scheme,
   2. 50% reduction in the value of land on which certain build-to-rent properties are constructed for the purposes of assessing land tax for both schemes, and
   3. for exemptions from and refunds of surcharge purchaser duty and surcharge land tax payable in respect of land on which build-to-rent properties are situated for both schemes.

Ruling

Reduction in land value for certain build-to-rent properties

3. Section 9E of the LTMA provides that, for the purposes of assessing land tax, the land value of a parcel of land is to be reduced by 50% if:
   • construction of the building situated on the land commenced on or after 1 July 2020, and
   • the building is being used and occupied as a build-to-rent property in accordance with the guidelines approved by the Treasurer.
4. Section 9F of the LTMA provides that, for the purposes of assessing land tax, the land value of a parcel of land is to be reduced by 50% if land is owned at midnight on 31 December in any year after 2024 and:
   • construction of the building situated on the land commenced on or after 1 July 2020, and
   • the building is being used and occupied as a build-to-rent property in accordance with the guidelines ^[1] approved by the Treasurer.
5. The build-to-rent property will qualify for the 50% reduction in land value when the building is completed and an occupational certificate is issued. The building must satisfy the requirements specified in the Treasurer’s guidelines. It does not matter if some of the build-to-rent dwellings are in the process of being advertised or are temporarily unoccupied; the property will still qualify.
6. For the reduction to apply, a significant proportion of the labour force hours spent on the construction^[2] of the building must involve or have involved work performed by persons who belong to one or more of certain classes of workers (section 9E(2)(c)) of the LTMA).
7. For the purposes of the build-to-rent scheme, significant proportion means 10% or more. Evidence must be provided to prove that the labour force hours spent is a minimum of 10% over the entire construction period. A person may be associated with more than one class of workers; however, the hours worked may only be counted to a single worker class. The determination of a worker’s eligibility is made at the time of engagement. For instance, a person who has been unemployed for an extended period is classified as an unemployed worker for the entire duration of their employment.
8. The schedule below identifies the classes of workers^[3] and documents or other evidentiary materials that applicants for the concessions will need to furnish to Revenue NSW in support of an application:

Proportionate reduction under Sections 9E(7) and 9F(3)

9. Sections 9E(7) and 9F(3) of the LTMA provide that, if the Chief Commissioner is satisfied that only part of a parcel of land is being used and occupied for a build-to-rent property, the reduction in land value (i.e. the tax concession) is to be proportionately decreased. Some property, although not used for accommodation, will be considered as build-to-rent property for the purposes of this concession if they are available exclusively for use by the tenants. See examples below:

   What may be considered as falling within the meaning of 'build-to-rent property':

   • on-site management apartment,
   • swimming pool,
   • storage areas,
   • tennis courts,
   • recreation areas,
   • gym,
   • storage spaces,
   • car parks.

   What will not be considered 'build-to-rent property':

   • shops,
   • cafes,
   • restaurants,
   • hairdressers,
   • similar commercial ventures.

10. For some properties that are available for use by both tenants and non-tenants, the calculation will be on a further 50% proportionate basis. For example, gyms, car spaces etc. However, shops, cafes, restaurants, hairdressers etc will not be considered build-to-rent properties even if they are available for use by both tenants and non-tenants.

    Example 1

    A build-to-rent property includes a gym, swimming pool and recreation areas. All for the exclusive use of the tenants. The car park includes a few car spaces for visitors/guests of the tenants. The total floor space of the property is 15,000 sq metres. The average land value of the whole property is $3,000,000.

    • The whole land value will be reduced by 50%.
    • Land value will be (3,000,000 X 50%) = $1,500,000

    Example 2

    A build-to-rent property also includes a number of retail shops and a cafe on the ground floor. The concession will not apply to the retail shops and the café. The total floor space of the property is 15,000 sq metres. The total floor area of the shops and café is 1,500 sq metres. The average land value of the whole property is $3,000,000.

    • Value of 1 sq metre ($3,000,000/15,000) = $200
    • Total build-to-rent floor space (15,000-1,500) = 13,500
    • Value of build-to-rent floor space (13,500 X 200) = $2,700,000
    • Land tax concession of 50% applied ($2,700,000 X 50%) = $1,350,000
    • Value of other property (1,500 X 200) = $300,000
    • Total land value after reduction is ( $1,350,000 + $300,000) = $1,650,000

    Example 3

    A build-to-rent property also includes a gym. The gym is for both tenants and external clients who purchase a gym membership. The gym also has 50 car spaces for gym members and staff. The total floor space of the property is 15,000 sq metres. The total floor area of the gym is 700 sq metres. The total area of the 50 car spaces is 500 sq metres. The average land value of the whole property is $3,000,000.

    • Value of 1 sq metre ($3,000,000/15,000) = $200
    • Number of square metres used by non-tenant gym members (700 X 50%) = 350
    • Total area of car spaces available for use by non-tenant gym members and staff = 500
    • Total area of floor space used by non-tenants (350 + 500) =850
    • Total build-to-rent floor space (15,000 - 850) = 14,150
    • Value of build-to-rent floor space (14,150 X 200) = $2,830,000
    • Land tax concession of 50% applied ($2,830,000 X 50%) = $1,415,000
    • Value of other property (850 X 200) = $170,000
    • Total land value after reduction is ($1,415,000 + $170,000) = $1,585,000

    Note: If the other property is used non-exclusively by the tenants, then the Chief Commissioner will provide the land tax concession to 50% of that floor space whether or not the space used by non-tenants is more or less than 50%.

Restrictions on subdivision

11. One of the conditions for the reduction in land value is for the land to remain within a unified ownership structure for 15 years. If the land is subdivided or the ownership of the land is otherwise divided, within the 15-year period after the land value was reduced, the tax will be reassessed using the full value of the land for the year in which the land was subdivided and for each preceding year back to and including the year in which the concession was first claimed.

12. The Environmental Planning and Assessment Act 1979 defines the subdivision of land^[6] as the division of land into two or more parts that, after the division, would be obviously adapted for separate occupation, use or disposition. This may be caused by:

    1. conveyance, transfer or partition, or
    2. any agreement, dealing, plan or instrument rendering different parts of the land available for separate occupation, use or disposition.

13. If the building is sold or transferred without being subdivided within 15 years, and the building is still going to be used and occupied for a build-to-rent purpose by the new owner in accordance with the Treasurer’s guidelines, the approval will not be revoked. The new owner will continue to get the benefit of the 50% of the reduction of the value of the land if the land continues to be held in a single ownership.^[7] In cases that are not covered by this ruling or if you are unsure, you should apply for a private ruling.

14. For avoidance of doubt, land in respect of which planning approval has previously been provided permitting the land’s subdivision will not be ineligible for a land tax concession, so long as all requirements for the concession (including restrictions on subdivision following the granting of the concession) are satisfied.

Surcharge Land Tax and Purchaser Duty

Surcharge Purchaser Duty

15. Under section 104ZJB of the Duties Act, an Australian corporation^[8] may be entitled to a refund of surcharge purchaser duty on a transfer of residential-related property if:

1. the transfer was entered into on or after 1 July 2020, and
2. a build-to-rent property is constructed on that land by a corporation, and
3. the corporation is entitled to a reduction in land value under section 9E or 9F of the LTMA.

16. The building must be constructed on the land no later than 10 years after completion of the transfer of the residential-related property.

17. Surcharge purchaser duty may be refunded only if an application is made within 12 months after the owner of the land first became entitled to the 50% reduction in the value of the land under section 9E or 9F of the LTMA and no later than 10 years after completion of the transfer of the residential land to the Australian corporation.

18. The Chief Commissioner may exempt the corporation from paying surcharge purchaser duty on the transfer of the residential-related property if the Chief Commissioner is of the opinion that the corporation is likely to become entitled to a full refund of the relevant surcharge duty.

Surcharge Land Tax

19. Under section 5CA of the LTA, an Australian corporation may be entitled to a refund of surcharge land tax in respect of residential land owned by the corporation at midnight on 31 December in a year (the taxing year) during the relevant concession period if:

    1. a build-to-rent property is constructed on the land by the corporation, and
    2. the corporation is entitled to a reduction in the land value under section 9E or 9F of the LTMA.

    Relevant concession period means:

    1. if the corporation is entitled to the reduction in land value under section 9E of the LTMA, the period commencing at midnight on 31 December 2020 and ending at midnight on 31 December 2039, or
    2. if the corporation is entitled to the reduction in land value under section 9F of the LTMA, the period commencing at midnight on 31 December 2020 and ending at midnight on 31 December in the year the corporation ceases to be eligible for the reduction in land value.

20. A refund of surcharge land tax will only be provided in respect of the land tax years for the past 10 years before the building is completed.

21. The Chief Commissioner may exempt the corporation from paying surcharge land tax for a particular land if the Chief Commissioner is of the opinion that the corporation is likely to become entitled to a full refund of surcharge land tax.

22. Orders approved by the Treasurer and published in the Gazette provide guidance on how the refund will be calculated.

23. To be granted an exemption for either of the surcharges, the Chief Commissioner may have regard to the following:

    1. approval by the Foreign Investments Review Board to purchase real estate,
    2. relevant development approval,
    3. additional requirements included in the Treasurer’s guidelines,
    4. any other evidence considered relevant by the Chief Commissioner as detailed in Revenue Ruling G 013.

Revocation of an approval

24. An approval remains in force until it is revoked by the Chief Commissioner by notice to the person. The approval will cease to apply if the land is subdivided^[9] or the ownership of the land is otherwise divided within 15 years of the application for approval.

25. The revocation of an exemption can be backdated to when surcharge liability would (but for the approval) have arisen.

    If the revocation of an approval is backdated to extend to an exempted transfer, surcharge purchaser duty will be assessed or reassessed as if the approval had never applied to the transfer and as if liability for duty arose when revocation of the approval was notified.

    If the revocation of an approval is backdated to extend to a land tax year in respect of which the exemption has already been applied, surcharge land tax is payable and is to be assessed or reassessed as if the approval had never applied in respect of that tax year and each preceding year, but not more than 15 preceding years.

Footnotes

1. ^ The key test is whether the site is being used as a BTR development in line with the eligibility rules.
2. ^ Includes anything done at the construction site including but not limited to designing, surveying, accounting etc that relates to the building of the build-to-rent property.
3. ^ Definitions for the classes of workers is in the Treasurer’s Guidelines.
4. ^ Any other types of evidence not listed may also be accepted by the Chief Commissioner.
5. ^ Evidence could be a letter from the Local Aboriginal Land Council or from an Aboriginal community organisation.
6. ^ Section 6.2 of the Environmental Planning and Assessment Act 1979
7. ^ This is specific for the reduction of land value and does not cover surcharge purchaser duty or surcharge land tax as this exemption applies to the developer and would not apply to a subsequent purchaser who is a foreign person.
8. ^ Australian corporation means a corporation that is incorporated under the Corporations Act 2001 of the Commonwealth.
9. ^ A Development Application (DA) that allows for future strata subdivision will not, on its own, disqualify a property from the concession, as long as no action has been taken to implement a subdivision.