A growing dispute over how New South Wales calculates stamp duty is putting the state’s property tax system under scrutiny, with experts calling for a judicial review of the rules used since 2022.

The controversy centres on the annual indexation of stamp duty thresholds. Industry experts argue that changes made in 2022 may have resulted in thresholds being calculated from older 2019 figures rather than building on previously indexed amounts. If that interpretation is found to be incorrect, thousands of property buyers could have paid more tax than required.

The issue comes as stamp duty remains a major source of revenue for NSW. The state collected about $14.3 billion in stamp duty during 2025–26, while the 2026–27 budget forecasts around $12.6 billion, reflecting a weaker property market.

The potential scale of the disputed payments is substantial. More than 1.1 million property transactions have been affected during the period under scrutiny. Depending on the size of any alleged overcharge, estimates of potential refunds range from several billion dollars to as much as $11.5 billion. These figures remain estimates rather than confirmed liabilities.

The dispute is particularly significant because NSW is already facing pressure on property-related revenue. The government has forecast an $8.4 billion reduction in combined stamp duty and land-tax revenue over four years, largely because of weaker housing activity.

Property industry groups are urging the government to seek clarity from the NSW Supreme Court, arguing that taxpayers need certainty about how the law should be interpreted.

The NSW government, however, maintains that stamp duty has been calculated correctly and has rejected calls for an immediate court review.

If a court ultimately determines that the rules were applied incorrectly, the consequences could extend well beyond individual refunds, potentially creating a major financial and administrative challenge for the NSW government.