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

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This guide provides a clear, side-by-side comparison of BTR definitions, tax concessions, and access requirements across all Australian jurisdictions. If you’re planning a BTR project or need help navigating the rules, get in touch with our property tax experts for tailored advice and strategic support.

How can SW help?

We have helped clients navigate the complexities of the BTR scheme and determine their eligibility requirements. As specialists in property funds and property development, we provide strategic tax advice to support the success of your project.

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The legislation has passed both houses of parliament and will apply to eligible BTR developments to:

• increase the depreciation rate from 2.5% to 4% for capital works that commenced after 7:30pm 9 May 2023
• reduce the MIT WHT tax rate from 30% to 15% from 1 July 2024 for amounts referable to rental income or capital gains. This will align the MIT WHT rate with commercial property (i.e. office, retail and industrial). 

The higher 30% MIT WHT rate was a major impediment to foreign investment in the BTR sector. This legislation should help boost foreign investment in the BTR sector with the PCA announcing that it could deliver 80,000 new homes over the next 10 years.

Key impact of recent amendments

The key points from the recent amendments to the Bill that have been incorporated into the final legislation are:

• It will apply for all eligible BTR developments even if they existed prior to 9 May 2023. This was an important change and ensures that those businesses pioneering BTR have not been left high and dry
• A minimum lease period of 5 years must be offered to tenants (tenants can request shorter periods)
• BTR misuse tax will apply to the entity that owns the BTR development immediately before that development ceased to be an active BTR development ensuring the appropriate owner bears the liability
• The lease terms are to be determined by the Minister by legislative instrument
• The definition of an affordable dwelling will be determined by the Minister by legislative instrument

Key features of legislation

The key features of the BTR MIT legislation are:

Dwelling features

For our original release on the BTR legislation and more details on the various State BTR regimes please click here.

How SW can help

We are specialists in property funds and property development and can provide valuable advice on your projects.

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The SW Property & Infrastructure team are at the forefront of key changes and impacts related to BTR and the proposed legislation. Our submission to Treasury will cover all the noteworthy intricacies that will have long term ramifications on the BTR sector as detailed below.

Legislation will not be backdated

It is disappointing that the legislation will not be back dated for the small number of BTR pioneers that commenced construction on projects before 9 May 2023. These projects will be subject to the 30% Managed Investment Trust (MIT) Withholding Tax rate (WTR) imposed on residential property which may leave these small number of assets stranded and as these properties will not have concessional BTR MIT WHT treatment they will be more difficult to sell.  

BTR projects are anticipated to be predominately funded by large offshore investors who already have exposure to this asset class internationally.

Key points

Who’s eligible?

BTR developments must meet the following eligibility criteria:

• The development’s construction commenced after 7.30pm on 9 May 2023. Unfortunately, the Government has stuck with the original start date for the legislation.
• The development consists of 50 or more residential dwellings made available for rent to the general public.
• The development continues to be owned by a single entity, at any one time, for at least 15 years. BTR developments can still be sold during the 15 year compliance period as long as the dwellings in the BTR development continue to be owned by a single entity. The 15 year period does not reset if the BTR development is sold to another entity.
• Dwellings must be offered for lease terms of at least 3 years (unless a shorter term is requested by the tenant)
• At least 10% of the dwellings in a BTR development must be offered as affordable dwellings throughout the 15 year compliance period.

Does this reduce ‘Red Tape’?

The Government’s promise of cutting red tape and planning hurdles to attract more institutional investment in the housing sector seems inconsistent with the legislation’s complexity. The new rules appear more difficult to satisfy than most of the State BTR land tax concessions (as indicated in the below analysis).

• The Government has imposed a requirement to include 10% affordable tenancies in BTR developments. 
• In an active BTR development, there will likely be different types of dwellings with different sizes, total floorspace and different amenities: number of bathrooms, number of bedrooms, etc.
• The owner of the BTR development must make at least one of each apartment or dwelling types available as an affordable dwelling, that is dwellings of comparable size and amenities.
• This is to prevent a BTR owner from allocating only the lowest standard dwellings in a development as affordable dwellings, that is the lowest total floorspace, least number of bedrooms, least number of bathrooms etc.  

Use of foreign capital now requires an affordable tenancy component

A number of the state land tax concessions do not require an affordable tenancies component. Therefore, this will now need to be factored into the rental profile of BTR developments in NSW, VIC and WA where they are looking to fund developments using foreign capital.

15 year compliance period

As the 15% MIT WHT rate is only available for 15 years, the concession is not very beneficial considering the long-term nature of BTR developments and is not consistent with the original announcement that did not mention any restriction on the period of the lower 15% MIT WHT rate. 

All other commercial property held by a MIT is broadly subject to a 15% MIT WHT rate during the duration of the asset holding period by the MIT so it unclear why such a restriction has been imposed on the BTR sector.

Comparison with State BTR regimes

The following table summarises the key features comparison of NSW, Queensland, Victorian and Western Australian BTR land tax concessions.  There are also BTR exemptions for South Australia, Tasmania and ACT.

Get in touch

Should you have any questions regarding the new BTR MIT legislation or would like to contribute to our submission on this issue please contact either Abi, Stephen or Matt.

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Build to Rent (BTR) projects which will in turn ensure Victorians have access to more rental homes and a greater range of housing options.

BTR Benefits will be introduced to promote Victorian BTR projects. The BTR Benefits will comprise of:

• A 50% reduction in land tax for eligible BTR projects;and
• Exemption from Absentee Owner Surcharge for eligible BTR projects.

Both benefits will be available for a period of up to 30 years.

The concessions will only apply to eligible BTR developments. A BTR development is one or more buildings that are constructed or substantially developed for the purpose of providing multiple dwellings for lease under residential rental agreements.

An eligible BTR development must meet the following requirements for a continuous period of 15 years from the occupancy date:

• It must provide for at least 50 self-contained dwellings
• It is owned by the same owners
• It must be managed by a single management entity (except affordable housing or social housing projects)
• It must be suitable for occupancy after 1 January 2021 and before 1 January 2032; and
• It must be rented or available for rent under a residential rental agreement. The tenant must have an option of at least a 3 year fixed term rental but may elect a shorter term.

The owner of the land must apply to the Commissioner for the BTR Benefits.

A land owner must notify the Commissioner within 30 days if it has claimed a BTR Benefit and there is a change in circumstance that results in the land no longer being eligible. The land owner may then be liable for BTR special land tax which effectively claws back the concessions for all prior years together with interest.

The BTR benefits are largely similar to the concessions introduced in NSW with one noticeable difference being that the Victorian concessions do not provide an exemption from the Foreign Purchaser Additional duty. Instead, landowners will need to specifically apply for an exemption for this additional duty if applicable.

What action needs to be taken?

The BTR concessions are only available to eligible projects. A review should be undertaken of proposed projects to determine eligibility.

How SW can help

Our team can assist with this review and the application to the Commissioner. Reach out to one of our property experts below for support.

Get in touch

Matt Birrell

E mbirrell@sw-au.com

Abi Chellapen

E achellapen@sw-au.com

James Ye

E jye@sw-au.com

Robert Parker

E rparker@sw-au.com

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