Foreign investors will be slugged with a 4 per cent stamp duty surcharge when buying homes or apartments in NSW under a new measure in next week's state budget.
The State Government said the move would raise more than $1 billion over four years.
Overseas investors would also pay an extra 0.75 per cent land tax surcharge on residential real estate.
Treasurer Gladys Berejiklian said she was confident the extra cost would not deter foreign buyers.
"It's been proven successful in Victoria, we also know that Queensland is moving in this direction and we also know that most foreign investors are likely to absorb this cost and proceed with their transaction anyway," she said.
"We do not feel that this will in any way compromise the property market at all."
The Government also said foreign investors would no longer be entitled to a 12-month deferral for the payment of stamp duty for off-the-plan purchases of residential property.
Overseas buyers would not be given a tax-free threshold for the land tax surcharge.