Structure Before Strategy
If you’re a property investor, you’ve likely asked yourself a key question: Should I buy in my own name, or through a trust or company?
How you structure a property purchase can impact your tax exposure, asset protection, borrowing power, and long-term wealth strategy. One wrong decision could cost you thousands in tax, reduce your ability to finance future investments, or leave you exposed to legal claims.
In this guide, we break down what it means to buy property in a trust or company, how it compares to buying in your personal name, and what smart investors need to know before making the leap.
Why Structure Matters in Property Investment
Many first-time investors assume they should purchase property in their own name. That works fine for owner-occupiers or small-time investors, but as your portfolio grows, so do your risks.
The legal entity you buy property under affects:
- How much tax you pay
- How profits and losses are distributed
- What happens if you get sued or default
- Your ability to leverage equity for future purchases
- Succession planning and estate control
Choosing the right structure is not just about today. It is about protecting your portfolio for the future.
What Is a Trust?
A trust is a legal arrangement where a person or entity is responsible for managing property or assets on behalf of beneficiaries.
Types of Trusts for Property Investors
- Family Trust (Discretionary Trust)
A family trust is a legal structure where a trustee holds property for the benefit of a group of beneficiaries, typically family members. The trustee has the discretion to decide how income or capital is distributed among them. - Company Trust (Corporate Trustee)
A company trust refers to a trust where a company acts as the trustee rather than an individual. The company does not benefit from the trust but manages the assets on behalf of the beneficiaries under the terms of the trust deed. - SMSF (Self-Managed Super Fund) Trust
An SMSF trust is a superannuation fund where the members are usually also the trustees. It operates under strict rules set by the ATO and can hold property as an investment to support the retirement savings of its members.
Advantages of Buying Property in a Trust
- Asset Protection
When property is held in a trust, it is legally owned by the trustee on behalf of the beneficiaries. Because beneficiaries don’t directly own the asset, it may be protected from personal creditors or legal action against the beneficiary. This structure is especially valuable for individuals in high-risk professions or those concerned about future financial claims. - Tax Flexibility
Trusts have their own tax file number and must lodge an annual tax return. However, income from the property can be distributed to beneficiaries. If those beneficiaries are in lower tax brackets, the overall tax payable can be significantly reduced. This ability to distribute profits across individuals is one of the most attractive financial advantages of property ownership through a trust. - Estate and Succession Planning
Trusts allow for a clear, structured plan when the original owner passes away, becomes incapacitated, or is unable to manage the asset. The trust deed outlines how assets should be managed or transferred, helping avoid legal disputes among family members. In some cases, this can also reduce or defer certain taxes and government fees that would otherwise apply if the property were held in an individual’s name. - Liability Separation
Holding multiple properties or assets in separate trusts allows investors to isolate risk between them. If one investment faces legal or financial complications, the others remain protected. This is particularly useful for investors with complex or growing portfolios.
Disadvantages of Using a Trust
No Tax-Free Threshold
Trusts are taxed at the top marginal rate unless income is distributed. This must be planned carefully each year.Loss of Land Tax Concessions
In states like NSW or Victoria, trusts often do not qualify for land tax thresholds or concessions, which can cost thousands annually.More Complex Lending Criteria
Lenders often apply stricter conditions when financing property through a trust, such as reduced borrowing capacity and requiring personal guarantees. In most cases, trustees must also obtain Independent Legal Advice (ILA) before loan approval.
Advantages of Buying Property in a Company
Flat Tax Rate
Companies pay a fixed rate of 30% (or 25% for small businesses), which can be lower than the top individual tax bracket.Limited Liability
If something goes wrong, directors and shareholders are generally not personally liable for company debts.Professional Image
Owning property through a company can offer more credibility if you’re involved in property development or joint ventures.
Disadvantages of Using a Company
No CGT Discount
Unlike individuals and trusts, companies cannot claim the 50% Capital Gains Tax discount for assets held over 12 months.Double Taxation Risk
If profits are paid out to shareholders as dividends, further tax may apply on the income.Reduced Land Tax Concessions
Like trusts, companies often miss out on state-based thresholds and exemptions.Loan Structure Complexity
Banks often require director guarantees, and servicing calculators can be more conservative.
How to Buy Property Through a Trust or Company
- Set Up the Legal Entity
You must establish your trust or company before signing a contract. Otherwise, you may trigger double stamp duty or require legal amendments post-exchange.- For a trust, work with your accountant or solicitor to draft a trust deed and appoint a trustee.
- For a company, register through ASIC and appoint directors and shareholders.
- Choose the Right Trustee or Director
- For a Trust: The trustee can be one or more individuals or a company. A corporate trustee offers more separation and control but adds cost.
- For a Company: Directors are responsible for compliance. You can be the sole director and shareholder.
- Inform Your Lender
Loan applications for trusts and companies involve more documentation. You may need to provide:- Trust deeds or company constitution
- Personal guarantees
- Business financials or projected rental income
- Use a Highly Experienced Conveyancer who is familiar with managing Trust Purchases
You must include the full legal purchasing entity in the contract, and it must be correct per the name of the trust. A conveyancer or Property Lawyers familiar with trust and company purchases can ensure correct documentation, avoid stamp duty errors, confirm the entity is correct before contract exchange, and liaise with your lender or accountant.
How to Know If a Trust or Company Is Right for You
Ask yourself:
- Are you planning to buy multiple investment properties?
- Do you have family members who could benefit from income distribution?
- Are you concerned about personal asset protection?
- Do you operate a business or already invest through a corporate structure?
- Will you hold the property long-term or flip it quickly?
If you answered yes to any of these, a trust or company might be suitable. However, the best structure always depends on your individual financial goals, risk profile, and long-term plan.
Speak to the Right Professionals
Before committing to any structure, speak with:
- A property accountant for tax and structure advice
- A conveyancer to handle the legal transfer
- A mortgage broker who understands trust and company lending
- A lawyer if succession, liability, or estate planning is a concern
It is also worth doing an annual review to ensure your structure remains effective and compliant with current tax laws.
Conclusion: Structure Today, Save Tomorrow
Buying property in a trust or company is not just for wealthy investors. It is a tool used by smart, forward-thinking buyers who want more control, better protection, and long-term flexibility.
While it does come with more complexity, the benefits can far outweigh the costs if done right. The key is to get the structure right before you buy, align it with your goals, and work with the right team of professionals.
Your future self (and your portfolio) will thank you.
Thinking about buying your next investment through a trust or company?
Our team works hand-in-hand with you and your broker to help structure your property the right way.
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