Buying Property Through a Company or Trust in Australia 2026

For many Australian investors and business owners, the question eventually arises: should I buy my next investment property in my personal name, or through a company or trust structure?

There is no simple yes or no answer. Buying property through a business structure can offer tax planning opportunities, asset protection benefits, and estate planning advantages — but it also introduces complexity, higher compliance costs, potential tax disadvantages, and more restrictive lending criteria from banks.

In 2026, with continued focus on tax integrity and lending standards, understanding the real implications of different ownership structures is more important than ever.

This article provides a clear, practical comparison of buying property in personal names versus through companies and trusts. We cover tax implications, lender appetite, common pitfalls, and a decision framework to help you determine what makes sense for your situation.

At Finstac, we regularly work with accountants and business owners on these complex structuring decisions. We help clients understand both the financing and the broader financial implications before they commit.

If you are considering purchasing property through a company or trust, book a free consultation with one of our brokers who specialises in these arrangements.

Table of Contents

• Why Consider a Business Structure for Property?
• Common Structures Used
• Tax Implications: Personal Name vs Company vs Trust
• Division 7A and Unpaid Present Entitlements
• Lender Appetite for Company and Trust Borrowers
• Asset Protection Considerations
• Estate Planning and Succession
• Common Mistakes and Compliance Traps
• When a Business Structure Makes Sense
• When It Usually Creates More Problems
• Practical Decision Framework
• FAQs
• Conclusion and Next Steps

Why Consider a Business Structure for Property?

Investors and business owners explore company or trust ownership for several reasons:

• Tax planning — Potential access to lower company tax rates or more flexible income distribution through trusts.
• Asset protection — Keeping property separate from personal assets in case of business failure or personal liability.
• Estate planning — Easier to control succession and pass assets to the next generation.
• Multiple investors — Facilitates co-ownership with business partners or family members.
• Negative gearing flexibility — In some structures, losses can be used more effectively.

However, these benefits are often overstated or come with significant trade-offs that are not immediately obvious.

Common Structures Used

1. Company

• Separate legal entity with its own tax rate (currently 25% for base rate entities).
• Property owned by the company.
• Directors have duties and potential personal liability in some cases.
• Less flexible for distributing income and capital gains.

2. Unit Trust

• Fixed entitlements to income and capital.
• Often used when multiple parties invest together with clear ownership percentages.
• Can be more tax-efficient than a company for capital gains in some situations.
• Still requires a corporate trustee in most cases.

3. Discretionary (Family) Trust

• Highly flexible distribution of income and capital gains among beneficiaries.
• Popular for family wealth planning.
• Can be complex to administer and more heavily scrutinised by the ATO.
• Usually requires a corporate trustee.

4. Hybrid Structures

• Combinations of the above (e.g., company owned by a discretionary trust). These add significant complexity and are usually only appropriate for sophisticated investors with substantial assets.

Tax Implications: Personal Name vs Company vs Trust

This is where many people make decisions based on incomplete information.

Personal Name (Individual or Joint Names)

• Income taxed at marginal rates (up to 45% + Medicare).
• Capital gains taxed with 50% discount after 12 months.
• Full negative gearing benefits (losses offset other personal income).
• Simple and low compliance cost.
• No Division 7A issues.

Company

• Income taxed at 25% or 30%.
• Capital gains do not receive the 50% discount.
• Losses trapped inside the company (cannot offset personal income).
• Division 7A can apply to loans or benefits provided to shareholders.
• Higher compliance and accounting costs.
• Potential for double taxation on extraction of profits.

Discretionary Trust

• Income can be distributed to beneficiaries in lower tax brackets.
• Capital gains can often access the 50% discount.
• Losses generally trapped in the trust (cannot distribute losses).
• High compliance costs and ATO scrutiny.
• Complex rules around distributions and record keeping.

Key insight: For many investors, the tax advantages of company or trust ownership are smaller than expected once you factor in higher compliance costs, loss of capital gains discount (in companies), and restricted loss utilisation.

Division 7A and Unpaid Present Entitlements

Division 7A is one of the most important (and often overlooked) risks when using company structures.

If a company lends money to a shareholder (or associate), or if the shareholder uses company assets for personal benefit, the ATO can treat the amount as an unfranked dividend — taxable at the shareholder’s marginal rate.

This becomes particularly relevant when:

• The company owns property and the shareholder or their family uses it.
• Loans are made between related entities without proper documentation.
• Unpaid present entitlements from trusts are not properly managed.

Many investors only discover Division 7A issues years later during an ATO review or when trying to extract funds from the structure. Proper documentation and ongoing compliance are essential.

Lender Appetite for Company and Trust Borrowers

Banks and lenders generally view company and trust borrowers as higher risk than individuals. As a result:

• Interest rates are often higher (typically 0.30%–0.80% above equivalent personal loans).
• Maximum LVRs are usually more conservative (often capped at 70–80% for residential investment property).
• Serviceability assessments are stricter. Lenders look closely at the income of the entity and may apply additional scrutiny to trust distributions.
• Personal guarantees are almost always required from directors and beneficiaries.
• Documentation requirements are significantly higher (trust deeds, company constitutions, financial statements, tax returns, etc.).

Some specialist lenders are more accommodating than the major banks, but options are still more limited than for personal borrowing.

Asset Protection Considerations

One of the most commonly cited reasons for using a company or trust is asset protection. While there can be benefits, the protection is often overstated:

• Company-owned property offers some separation from personal creditors, but directors can still face personal liability in cases of insolvent trading or personal guarantees.
• Trust-owned property can offer protection, but the level of protection depends heavily on how the trust is structured and whether the trustee has acted properly.
• Creditors and the ATO have various legal avenues to challenge structures that appear designed primarily to defeat creditors.

Asset protection should never be the sole reason for choosing a structure. Proper legal and accounting advice is essential.

Estate Planning and Succession

Company and trust structures can offer advantages for estate planning:

• Control can be maintained through the trustee or company directorship.
• Assets can be passed to the next generation without immediate stamp duty in some cases (subject to state rules).
• Income can continue to be distributed flexibly after death.

However, these structures also create complexity upon death. Without proper estate planning (wills, enduring powers of attorney, and succession planning for the trustee/company), disputes and delays are common.

Common Mistakes and Compliance Traps

1. Choosing a structure primarily for tax reasons without understanding the full implications and ongoing compliance burden.
2. Ignoring Division 7A until it becomes a major problem.
3. Underestimating accounting and compliance costs — these can easily run to $5,000–$15,000+ per year for complex structures.
4. Poor documentation of loans, distributions, and related party transactions.
5. Assuming losses can be offset against personal income when using a company or trust (they generally cannot).
6. Not reviewing the structure as circumstances change (e.g., approaching retirement or significant changes in income).

When a Business Structure Makes Sense

A company or trust structure is more likely to be appropriate when:

• You have multiple investors or business partners who want clear, documented ownership percentages.
• You have a genuine need for asset protection that cannot be achieved through other means (e.g., adequate insurance).
• You have a sophisticated tax planning strategy developed in conjunction with a specialist accountant.
• You are building a larger property portfolio and want to keep investment assets separate from personal assets for estate planning reasons.
• You have stable, reliable cash flow and can comfortably absorb higher compliance costs.

When It Usually Creates More Problems

For many investors, particularly those with smaller portfolios or straightforward situations, a business structure creates more problems than it solves:

• Higher interest rates and more conservative lending criteria.
• Trapped losses and less flexible tax outcomes.
• Significantly higher ongoing accounting and compliance costs.
• Increased ATO scrutiny.
• Complexity upon sale, refinance, or death.

In many cases, buying in personal names (or joint names with a spouse) remains the simplest and most tax-effective approach, especially when combined with appropriate insurance and a well-drafted will.

Practical Decision Framework

Before deciding on a structure, ask yourself:

1. What is my primary goal — tax minimisation, asset protection, estate planning, or something else?
2. What is the realistic size of my property portfolio over the next 10 years?
3. Am I willing and able to pay significantly higher ongoing compliance costs?
4. Do I have (or will I have) multiple investors or complex family arrangements?
5. Have I received coordinated advice from both an accountant and a mortgage broker who understands these structures?
6. What happens to this structure if my circumstances change significantly (retirement, health issues, relationship breakdown)?Conclusion and Next Steps

Buying property through a company or trust can be appropriate in the right circumstances, but it is rarely as advantageous as many people assume. The combination of higher lending costs, trapped losses, Division 7A risks, and significantly higher compliance burdens means these structures only make sense for a relatively small subset of investors.

For most people starting or growing an investment portfolio, purchasing in personal names remains simpler, more flexible, and often more tax-effective in the long run.

If you are considering a company or trust structure for your next property purchase, the most important step is to obtain coordinated advice from professionals who understand both the tax and lending implications.

At Finstac, we work regularly with accountants on these complex transactions. We can help you understand the financing options available under different structures and ensure the lending strategy supports your overall financial and tax objectives.

Book a consultation to discuss your specific situation and goals.