March 2026 Edition
Welcome to our March 2026 newsletter.
In this edition, we discuss different structures available for purchasing property, including buying in your personal name, through a company, or via a trust. We outline the key advantages and disadvantages of each structure to help property investors make informed decisions based on their tax position, asset protection needs, and long-term investment goals.
Why Structure Matters in Property Investment
Many first-time investors assume they should purchase property in their own name. That can work well for owner-occupiers or small investors, but as your portfolio grows, so do the risks.
The legal entity you buy property under can affect:
- How much tax you pay
- How profits and losses are distributed
- Asset protection if legal issues arise
- Your ability to grow your property portfolio
- Succession planning and estate control
Choosing the right structure is not just about today — it is about protecting your portfolio for the future. Importantly, the ownership structure should ideally be decided before purchasing the property, as transferring property later can trigger capital gains tax and stamp duty.
Many investors focus only on the property itself, but the ownership structure can have a significant impact on tax outcomes and long-term wealth planning. This is an area where professional tax advice can make a meaningful difference.
Buying Property in Your Personal Name
Advantages
- Simplicity
Lower setup costs and minimal administrative requirements. - Capital Gains Tax (CGT) Discount
Individuals may receive a 50% CGT discount if the property is held for more than 12 months. - Main Residence Exemption
If the property is your primary residence, you may be able to avoid CGT on sale. - Negative Gearing Benefits
Property losses may be offset against other taxable income.
Disadvantages
- Limited Asset Protection
Personally owned property may be exposed to creditors if legal issues arise. - Higher Tax on Rental Income
Rental income is taxed at your marginal tax rate, which may be as high as 47%. - Limited Flexibility
Changing ownership later may trigger stamp duty and capital gains tax. - Estate Planning Limitations
The property forms part of your personal estate and may be subject to probate.
Buying Property Through a Trust
Discretionary (family) trusts are commonly used by investors because they offer flexibility in income distribution, asset protection, and estate planning benefits, although they involve greater administrative complexity.
A family trust holds property on behalf of beneficiaries, typically family members.
Advantages
- Asset Protection
Because the trust owns the property, it may provide an additional layer of separation from personal assets. - Income Distribution Flexibility
Trust income may be distributed among beneficiaries, potentially allowing income to be taxed in the hands of those on lower marginal tax rates. - Capital Gains Tax Benefits
If a property held in a trust is sold after 12 months, the trust may qualify for the 50% CGT discount similar to individual ownership. If a capital gain is distributed to an individual, trust, or partnership, the discount may be retained. If distributed to a company, the company cannot access the CGT discount. - Estate and Succession Planning
Trust assets generally do not form part of your personal estate and therefore do not require probate. - Longevity of Structure
Trusts can continue across generations, allowing assets to remain within the structure. - Intergenerational Planning
A change in control of the trust does not normally trigger CGT on the property. - Risk Separation
Some investors use separate trusts to isolate risk between properties. - Corporate Trustee Option
Many trusts appoint a company as trustee to reduce personal liability.
Disadvantages
- Setup and Ongoing Costs
Trusts require legal establishment and ongoing accounting compliance. - Limited Negative Gearing
Trust losses generally cannot offset personal income. - No Tax-Free Threshold
Undistributed income may be taxed at the top marginal tax rate. - Administrative Complexity
Trusts require annual resolutions, tax returns, and professional oversight. - Limited Main Residence Exemption
Property held in a trust usually does not qualify for the main residence CGT exemption. - Potential Land Tax Differences
In some states, trusts may not qualify for the standard land tax threshold. - Beneficiaries Do Not Directly Control Assets
Legal ownership is held by the trustee rather than beneficiaries. - Limited Ability to Retain Profits
Trust income is usually distributed each year to avoid higher tax rates, which may limit reinvestment within the structure. - Additional Lending Requirements
Financing property through a trust may involve additional lender requirements such as personal guarantees.
Buying Property Through a Company
Some investors choose to hold property through a company structure, particularly for commercial investments or business-style property ventures.
Advantages
- Asset Protection
A company is a separate legal entity and may provide liability protection. - Flat Tax Rate
Companies generally pay tax at 30%, or 25% for base rate entities. - Suitable for Multiple Investors
Companies can simplify ownership arrangements where several investors are involved.
Disadvantages
- No CGT Discount
Companies cannot access the 50% CGT discount. - Additional Tax on Dividends
Shareholders may pay additional tax when profits are distributed. - Limited Use of Losses (No Negative Gearing)
Company losses cannot offset shareholders’ personal income. - Higher Compliance Requirements
Companies must meet ongoing corporate and tax reporting obligations.
Common Advanced Structures Used by Experienced Investors
Experienced investors sometimes combine structures to improve tax efficiency and asset protection.
Trust with Corporate Trustee
A company acts as trustee of a family trust. This structure can improve asset protection and simplify succession planning by separating control of the trust from personal assets.
Trust with Bucket Company
A discretionary trust may distribute excess income to a bucket company, which is taxed at the company tax rate (generally 25% for base rate entities). This may help manage higher marginal tax rates but must be structured carefully.
Unit Trust
Unit trusts are commonly used when multiple investors purchase property together. Investors hold units and receive income according to their ownership percentage, providing clear ownership proportions but less flexibility than discretionary trusts.
Key Considerations When Choosing a Structure
Before deciding on a structure, consider:
- Your current and future tax position
• The level of asset protection required
• Your estate planning objectives
• Administrative costs and compliance obligations
• Your long-term investment strategy
Conclusion
There is no single structure that suits every investor. The most appropriate option depends on your income level, investment goals, risk profile, and long-term plans.
Seeking professional advice before purchasing property is important, as the ownership structure can significantly influence tax outcomes, asset protection, and estate planning.
By planning the structure carefully from the beginning, investors can build a property portfolio that is tax-efficient and sustainable over the long term.
Disclaimer
This newsletter is provided by Insight Tax Accountants for general information only and does not constitute personal tax, financial, or legal advice. Information is current at the time of publication but individual circumstances may vary. You should seek professional advice before making decisions regarding property ownership or taxation matters.
Insight Tax Accountants is a registered tax agent and complies with the requirements of the Tax Agent Services Act 2009 and the professional standards of the Tax Practitioners Board.
Liability limited by a scheme approved under Professional Standards Legislation.