Most Australians buy investment property in their own name. It is the simplest path and often the right one, but it is not the only option. Some investors choose to hold property through a company or a trust, typically for tax planning, asset protection, or estate planning reasons.

Before you decide on a structure, it is worth understanding what each actually involves, what the trade-offs are, and critically, how the structure affects your ability to borrow. This is an area where getting the wrong advice upfront can cause real problems down the track.

This article gives you an overview of the main options. It is general information only, not tax or legal advice. You should always speak to an accountant or tax adviser about the right structure for your specific situation before making a decision.

Buying in your own name: the baseline

Holding property personally is straightforward. You borrow in your own name, the property is on your personal balance sheet, and income and expenses flow through your individual tax return.

If the property is negatively geared, the loss offsets your other income and reduces your tax. If you sell after holding for more than twelve months, you receive a 50% capital gains tax (CGT) discount as an individual. Lending is generally simpler and more competitively priced compared to trusts or companies.

The main downside is that the asset is exposed to personal liability claims. If you are sued, the property may be at risk depending on the circumstances.

Buying through a discretionary trust

A discretionary trust (also called a family trust) is one of the more common structures for property investors who are thinking about tax flexibility and estate planning.

The potential advantages:

  • Rental income can be distributed among beneficiaries in lower tax brackets, potentially reducing the overall tax paid by the family group
  • If held for more than twelve months, the trust can access the 50% CGT discount and pass it through to individual beneficiaries
  • Assets held in trust are generally separate from your personal estate, which can offer protection from creditors and streamline estate planning

The trade-offs to understand:

  • Negative gearing losses cannot be distributed to beneficiaries. They stay within the trust and can only offset future trust income, not your personal salary. If you are counting on negative gearing to reduce your tax bill right now, a trust may not work the way you expect
  • Land tax thresholds vary significantly by state. In New South Wales, trusts generally receive no land tax threshold, meaning land tax applies from the first dollar of land value. This is a material cost that many investors do not factor in upfront
  • Lending policy for trust structures has tightened in recent years. Not all lenders will lend to a discretionary trust, and those that do may apply stricter conditions or higher rates

Buying through a company

Holding property in a company structure is less common for residential investment property, but it suits certain investors, particularly those on high personal income who are less concerned about accessing the CGT discount.

The potential advantages:

  • Companies pay tax at a flat rate of 25% to 30%, which may be lower than your marginal personal tax rate if you are a high income earner
  • The company is a separate legal entity, providing a degree of separation between your personal assets and the investment property
  • Profits can be retained within the company or distributed to shareholders as dividends

The trade-offs:

  • Companies do not receive the 50% CGT discount. If you sell a property that has grown significantly in value, the full capital gain is taxed at the company rate, which may result in a higher tax outcome than holding personally or through a trust
  • Losses within a company cannot be distributed externally. Negative gearing benefits stay inside the company
  • Lending to a company for investment property is treated differently by lenders. Fewer products are available, rates are often higher, and some lenders require personal guarantees from directors

How structure affects your borrowing

This is the part most investors underestimate. Your choice of ownership structure directly affects how lenders assess your loan application, what rates are available, and how much you can borrow.

Lending in a personal name is the most straightforward. Most lenders have well-defined policies for personal investment loans, and competition between lenders is high.

For trust structures, lender appetite varies significantly. Some lenders will not lend to discretionary trusts at all. Others will, but with higher serviceability requirements or additional conditions. The rate on offer may also be higher than for a personal loan.

For company borrowers, the pool of willing lenders is smaller again, and the process is typically more complex.

If you are considering a company or trust structure, speaking to a broker early is important. You need to know what your borrowing options actually look like before you set up the structure and before you make an offer on a property.

Getting the right advice before you commit

There is no universal right answer on structure. It depends on your income, the size of your portfolio, your plans for the property long-term, your family situation, and your risk tolerance. An accountant or tax specialist is the right person to advise on the tax and legal aspects.

A mortgage broker can tell you what the lending landscape looks like for each structure, which lenders will consider your scenario, and what your borrowing capacity looks like under each option. Getting both perspectives before you commit saves a lot of complexity later.

If you are thinking about buying an investment property and want to understand how different structures affect your lending options, book a free call with Matt or Jess. We can walk you through the lending side and make sure you are set up in a way that works.