A second home is any property you buy while keeping your main home, whether you use it for holidays, rent it out or both. Lenders assess both loans together, may treat the second property as an investment, and count only part of any rent. In NSW it can also bring land tax, because only your main residence is exempt.
| Point | Detail |
|---|---|
| Loan type | Owner-occupied or investment, depending on use and lender policy |
| NSW land tax | Applies when your taxable land is worth more than $1,075,000 in total (2026) |
| Short-stay in Greater Sydney | Non-hosted letting is capped at 180 days a year |
| Capital gains tax | Usually payable on sale, because only one home is your main residence |
| Negative gearing | Changes from 1 July 2027 for established property bought after 12 May 2026 |
Is a holiday home owner-occupied or an investment?
It depends on how you use it and on the lender. A home you rent out is an investment, priced and assessed as one. A holiday home kept only for your own use is not your main residence, and lenders differ on how they classify it. The classification matters because investment rates are often higher and the policy rules differ.
How do lenders assess a second home?
- Both loans count. Your existing home loan is assessed at a buffered rate alongside the new one.
- Rent is shaded. Lenders count part of the expected rent, and some count less for short-stay income.
- Equity can be the deposit. Many buyers use equity in their main home, as explained in using equity to buy.
- Location matters. Some lenders limit lending in small towns or holiday areas.
Will you pay NSW land tax on a second home?
Possibly. Your principal place of residence is exempt, but a second home is not. NSW adds up the land value of all your taxable land, and for 2026 there is no land tax on a total up to $1,075,000. Above that, the tax is $100 plus 1.6% of the value above $1,075,000, with a higher rate above the premium threshold.
| Total taxable land value | Land tax |
|---|---|
| $600,000 | $0 |
| $1,200,000 | $2,100 |
| $1,300,000 | $3,700 |
Land value is the value of the land only, not the building, averaged by Revenue NSW across recent years.
Can you rent a holiday home on Airbnb?
Yes, within the rules. In Greater Sydney, letting a whole home on a short-stay basis while you are not living there is capped at 180 days in a 12-month period, and properties must be registered on the NSW short-term rental register. Strata by-laws may also restrict it. The short-stay rental property loans page covers the lending side and the NSW rules in more detail.
What tax applies when you sell?
Capital gains tax is usually payable on a second home, because only one property can be your main residence at a time. From 1 July 2027, for individuals, gains that accrue after that date move from the 50% discount to cost base indexation with a 30% minimum tax. Your accountant can work out what applies to your purchase.
Can you negatively gear a holiday home?
Only the part used to earn income, and new rules apply. For established residential property bought after 7:30pm on 12 May 2026, from 1 July 2027 losses can only offset residential rental income and capital gains, with any excess carried forward. Properties held before that time are not affected, and new builds keep negative gearing. The page on negative gearing explains the changes.
A worked example
A family with a home in the Inner West buys a $900,000 holiday house on the South Coast using equity for the deposit. Both loans are assessed together at buffered rates, and the lender counts part of the expected holiday rent. Their only taxable land is the holiday house, with a land value of $600,000, so no land tax is due in 2026.
What should you decide before you buy?
- How often you will use it, and whether you will rent it out.
- Whether the loan should be investment or owner-occupied, and how the deposit is structured.
- The land tax and strata rules that apply.
- How the rent will be counted by the lender.
- The capital gains and negative gearing position, with your accountant.
The investment loans page covers how lenders assess a second property, and the rental yield calculator tests the numbers.
Questions people ask
Can I get a home loan for a holiday house?
Yes. Lenders assess it with your existing loan, and may treat it as an investment if you rent it out.
Do I pay land tax on a holiday home in NSW?
Only if your total taxable land value is above $1,075,000 in 2026. Your main residence is exempt.
Can a second home be my main residence?
Only one home can be your main residence at a time for capital gains tax, and for land tax the home must be your principal place of residence.
Charles Touma structures second home loans so your equity, both loans and the rent are counted the right way, and compares lenders that lend in holiday areas. A free 30-minute call covers your equity and plans for the property. General information only, not tax or credit advice; ask your accountant about land tax, capital gains and negative gearing. Sources: Revenue NSW, land tax thresholds and rates for 2026; NSW Department of Planning, short-term rental accommodation; ATO, negative gearing and capital gains tax reform, checked 17 October 2026.
General information only, not credit, legal or tax advice. Your situation is assessed properly before any recommendation. Government scheme details change; figures are current at the time of writing.
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