NSW expands surcharge purchaser duty relief for build-to-rent and retirement villages

In a significant shift in foreign investor taxation policy, the New South Wales Government has enacted legislation providing relief from foreign purchaser surcharge duty for certain build-to-rent (BTR) and retirement village projects. The measures form part of the Government’s broader housing supply strategy and are intended to encourage institutional investment in long-term rental accommodation and retirement living assets.

The changes, contained in the Revenue and Other Legislation Amendment Bill 2026 (NSW) which received assent on 29 June 2026, represent a notable shift in policy. While foreign investor surcharges were originally introduced to moderate demand from overseas purchasers of residential property, the NSW Government has acknowledged that these measures may also discourage the investment needed to increase housing supply. The reforms are intended to support the delivery of long-term rental accommodation and retirement living developments by improving project feasibility and foreign investment into the NSW housing market.

Legislative changes

The reforms are implemented through amendments to Chapter 2A of the Duties Act 1997 (NSW) (Duties Act) by expanding the existing surcharge purchaser duty relief provisions and introducing a new Part 3A – ‘refunds relating to build-to-rent properties, retirement villages and other properties’.

Part 3A introduces a number of new defined concepts including:

• Australian corporation
• build-to-rent land tax concession
• exempt transferee
• exempt transferee approval
• refund eligible transfer
  • a refund eligible transfer broadly includes a transfer of residential-related property entered into on or after 1 July 2026 that is not made pursuant to an agreement entered into before that date.

The new provisions are primarily contained in:

• section 104ZJC – refunds for qualifying BTR developments
• section 104ZJD – refunds for retirement village developments and expansions
• section 104ZJE – refunds for acquisitions of existing retirement villages
• section 104ZJF – calculation of refunds
• sections 104ZJG–104ZKC – exemptions for approved exempt transferees.

Build-to-rent acquisitions

The amendments introduce new section 104ZJC of the Duties Act, which provides a refund mechanism for surcharge purchaser duty where land transferred to a foreign purchaser subsequently becomes entitled to a BTR land tax concession under section 9E or section 9F of the Land Tax Management Act 1956 (NSW) (LTMA). In effect, the amendments further align the transfer duty and land tax regimes, ensuring that developments satisfying the State’s BTR policy objectives can benefit from both acquisition and holding cost concessions.

Importantly, the amendments are not limited to the acquisition of development sites intended to be converted into BTR projects. Relief may also be available in respect of transfers of completed and operational BTR assets, provided the land continues to qualify for the relevant BTR land tax concession requirements for the prescribed period.

This is a significant development for foreign developers, as it recognises that a BTR market relies not only on development activity, but also on an active secondary market that enables developers to recycle capital into new projects and allows long-term investors to acquire stabilised assets.

From a commercial perspective, the availability of surcharge purchaser duty relief may materially improve the attractiveness of NSW BTR investments for foreign developers. Given the current surcharge purchaser duty rate of 9%, the concession can represent a substantial reduction in upfront acquisition costs and may improve project feasibility, investment returns, and transaction activity across the sector.

SW recently examined the range of BTR duty, land tax, and foreign investor surcharge concessions available across Australia. Read our article Build to Rent | State Taxes comparison for a comparison of the current state-based tax settings and incentives available to developers and investors.

Retirement village relief

The changes also introduce new surcharge purchaser duty concessions for retirement village projects. While much of the public discussion surrounding foreign investor surcharge reform has focused on BTR projects, the retirement living sector has historically faced similar challenges in attracting institutional investment due to the application of foreign purchaser surcharges to large-scale acquisitions.

To address these concerns, the amendments insert new sections 104ZJD and 104ZJE of the Duties Act, which extend surcharge purchaser duty relief to qualifying retirement village transactions.

Under section 104ZJD, surcharge purchaser duty relief may be available where an Australian corporation acquires land and subsequently constructs a retirement village or develops at least 50 new or additional retirement village dwellings. The adoption of a minimum dwelling threshold demonstrates a policy intent to direct the concession towards larger-scale retirement living projects that are more likely to attract institutional investment and contribute meaningfully to housing supply and retirement living infrastructure.

In addition, section 104ZJE provides relief for acquisitions of existing retirement villages comprising of at least 50 dwellings. This aspect of the reform may be particularly significant for institutional investors seeking to acquire established retirement living portfolios. The concession acknowledges that the acquisition of operational retirement villages can be just as important to the ongoing development of the sector as the construction of new projects.

The legislation also introduces an exemption from surcharge purchaser duty in relation to transfers of retirement village dwellings from residents back to village operators. This amendment addresses a transaction that commonly occurs within retirement village operating structures and helps remove unnecessary tax friction that could otherwise arise in the ordinary course of village operations.

These measures also reflect a broader trend in NSW tax policy towards distinguishing between foreign investment that supports the delivery and operation of essential housing infrastructure and investment that merely increases demand for residential property. In that respect, the retirement village reforms mirror the NSW Government’s approach to the BTR sector, with both concession regimes seeking to channel institutional capital into long-term housing assets that are expected to generate broader community benefits.

Key takeaways

The NSW reforms represent a notable expansion of surcharge purchaser duty relief for foreign investors.

In particular, the amendments:

• expand the surcharge purchaser duty relief framework under Chapter 2A of the Duties Act 1997 (NSW)
• introduce new refund mechanisms under sections 104ZJC–104ZJE
• provide exemption pathways for approved exempt transferees
• further align the surcharge purchaser duty regime with existing BTR land tax concessions
• encourage investment in large-scale rental housing and retirement living developments
• support the NSW Government’s broader housing supply objectives.

How SW can help

SW’s State Taxes team can assist clients with:

• determining eligibility for surcharge purchaser duty refunds and exemptions
• reviewing acquisition and investment structures
• assessing eligibility under the BTR concession regime
• advising on retirement village acquisitions and developments
• managing Revenue NSW applications and refund claims.

Contributors

Blake Trad | Senior Consultant, Tax

Robert Parker | Consulting Director, Tax