Racing NSW has made a major investment in horse welfare, buying a property to be used for retired racehorses with facilities for rehabilitation, retraining and rehoming.

The 2600 acre property at Capertee, 45km north of Lithgow, includes state-of-the-art equestrian facilities and is an incentive of the Racing NSW Equine Welfare Fund.

The property will also be used as a location for industry training for future participants and as a home for retired champions similar to Living Legends in Melbourne.

"This is a major investment, not only for the rehabilitation of racehorses which is a paramount objective of the board, but also as an investment for the future as a land bank that could have a multitude of uses for the NSW Thoroughbred Racing Industry in the future," Racing NSW Chairman Russell Balding said.

A nine-bedroom farmhouse on the site will be converted to a bed and breakfast establishment.

Eco-tourism activities such as trout fishing, four wheel driving, organic pick-your-own cooking and trail riding will be established at the property as part of the farm stay experience.

Racing NSW established the Equine Welfare Fund last year, funded by one per cent of all prize money paid in NSW, realising $2 million a year.

The purpose of the fund is to ensure that all NSW domiciled thoroughbred horses will be appropriately cared for outside of their racing careers.