How you hold your investment property — personally, in a trust, or through a company — affects your tax, asset protection, and flexibility for decades to come.

Get it right from the start and you'll save thousands. Get it wrong and you may face expensive restructuring costs or miss out on tax benefits entirely.

This guide explains the three main structures, their pros and cons, and which is right for different investor situations.

Overview: Three Ways to Hold Property

Structure	Tax Rate	50% CGT Discount	Asset Protection	Flexibility	Setup Cost
Personal Name	Marginal rate (16-45%)	Yes	Low	Limited	Free
Family Trust	Distributed at beneficiary rates	Yes (via beneficiaries)	High	High	$1,500-$3,000
Company	25-30% flat	No	High	Medium	$1,000-$2,000

There's no universally "best" structure — it depends on your income, goals, risk profile, and long-term plans.

Holding Property in Your Personal Name

The simplest option: you buy the property in your own name (or jointly with a partner).

How It Works

Property is registered in your name on the title
Rental income is added to your personal taxable income
Expenses and deductions offset your personal income
Capital gains are added to your personal income when you sell

Tax Treatment

Rental Income:
Taxed at your marginal rate. If you earn $150,000 salary plus $20,000 net rental income, you'll pay tax on $170,000.

Negative Gearing:
Losses offset your other income. A $10,000 loss reduces your taxable income from $150,000 to $140,000 — saving $3,700 in tax (at 37% marginal rate).

Capital Gains:
When you sell, the gain (after 50% discount if held 12+ months) is added to your income and taxed at your marginal rate.

Pros

Simple — no structures to set up or maintain
Negative gearing works immediately — losses offset your salary
50% CGT discount — halves your capital gains tax
No setup costs — buy like any other purchase
Full control — you make all decisions

Cons

No asset protection — property is exposed to personal liability (lawsuits, bankruptcy, divorce)
No income splitting — all income taxed to you (or split by ownership percentage)
Difficult to transfer — changing ownership triggers stamp duty and CGT
Estate planning limitations — property goes through your will

Best For

First-time investors buying their first 1-2 properties
Investors who want negative gearing benefits against their salary
Those in lower tax brackets (under $135,000)
Investors who don't have significant asset protection concerns
Simple situations without business or liability risks

Holding Property in a Family Trust

A discretionary family trust (also called a family discretionary trust) is a popular structure for property investors.

How It Works

A trust is a legal arrangement where a trustee holds assets for beneficiaries
The trustee (often a company) makes decisions about the property
The trust earns the rental income and pays expenses
Each year, the trustee distributes net income to beneficiaries

Key Parties

Party	Role
Settlor	Creates the trust (usually a nominal role)
Trustee	Controls the trust and makes decisions (often a company)
Appointor	Can remove/appoint trustees (ultimate control)
Beneficiaries	People who can receive distributions (usually family members)

Tax Treatment

Rental Income:
The trust itself doesn't pay tax. Instead, net income is distributed to beneficiaries who pay tax at their own marginal rates.

Income Splitting:
The trustee can distribute income to beneficiaries in lower tax brackets. A family with one high earner and one spouse earning less can potentially save thousands.

Example:

Trust earns $30,000 net rental income
Instead of one person paying tax at 37%, distribute to spouse in 19% bracket
Tax saving: potentially $5,400 per year

Negative Gearing Limitation:
Trust losses are trapped in the trust — they cannot be distributed to offset your personal salary. The loss carries forward and offsets future trust income.

Capital Gains:
The trust can distribute capital gains to adult beneficiaries who then apply the 50% discount. This is a key advantage for asset growth strategies.

Pros

Income splitting — distribute to lower-taxed family members
Asset protection — property is owned by the trust, not you personally
50% CGT discount — preserved when distributed to individuals
Estate planning — trust continues after death, can avoid probate
Flexibility — change distribution each year based on circumstances

Cons

No negative gearing against personal income — losses trapped in trust
Setup and maintenance costs — $1,500-$3,000 to establish, plus annual accounting
Complexity — requires annual tax return, distribution minutes, compliance
Land tax surcharges — some states apply higher land tax to trusts
Loss of first home owner benefits — if trust owns property

Best For

Investors with positively geared or neutral properties
High-income families who can benefit from income splitting
Those with asset protection concerns (business owners, professionals)
Investors planning to hold long-term for capital growth
Those building a larger portfolio (3+ properties)

Holding Property in a Company

A company can be used to hold investment property, though it's less common for residential property.

How It Works

A proprietary limited (Pty Ltd) company is established
The company purchases the property
Rental income is company income, taxed at company rate
Profits can be retained in the company or paid as dividends to shareholders

Tax Treatment

Rental Income:
Taxed at the company tax rate — 25% for base rate entities (aggregated turnover under $50 million) or 30% for larger companies.

No Negative Gearing Benefit:
Losses reduce company income but don't flow through to your personal return. There's no immediate tax benefit from negative gearing.

No 50% CGT Discount:
This is the major disadvantage. Companies don't receive the 50% CGT discount. A $500,000 capital gain is taxed on the full $500,000 at 25-30%, not $250,000 at your marginal rate.

Example — CGT Comparison:

Structure	Capital Gain	After 50% Discount	Tax Rate	Tax Paid
Personal (45% bracket)	$500,000	$250,000	45%	$112,500
Company	$500,000	N/A	25%	$125,000

And if you want to access those company profits personally, you'll pay dividend tax on top.

Pros

Flat tax rate — 25-30% regardless of your personal income
Asset protection — company is separate legal entity
Retain profits — can leave money in company to reinvest (but Division 7A applies)
Limited liability — your liability is limited to your investment in the company

Cons

No 50% CGT discount — pay tax on full capital gain
No negative gearing benefit — losses don't offset personal income
Division 7A complexity — strict rules on loans/benefits to shareholders
Double taxation potential — company tax plus dividend tax when you extract funds
Ongoing compliance — annual returns, ASIC fees, accounts

Best For

Commercial property investors (where income is the main goal)
Investors who will never sell (no CGT event)
High-income earners who want to cap tax at 25-30%
Situations where profits will be reinvested in the company
NOT recommended for most residential property investors

Land Tax Implications

Land tax varies by state and can significantly impact structure decisions.

State Comparison

State	Individual Threshold	Trust Threshold	Company Threshold
NSW	$1,075,000	$1,075,000*	$1,075,000
VIC	$50,000	$50,000*	$50,000
QLD	$600,000	$350,000	$350,000
WA	$300,000	$300,000	$300,000
SA	$732,000	$25,000	$732,000

*Trust surcharge may apply in some states if foreign beneficiaries possible
Note: SA has an unusually low trust threshold — seek advice if holding property in a trust in SA.

Key Points

Land tax applies to unimproved land value, not property value
Principal residence is generally exempt — but trusts can complicate this
Multiple properties are aggregated — you can't avoid thresholds by using separate structures
Some states have trust surcharges — check current rules in your state

Which Structure Is Right for You?

Scenario 1: First Property, Moderate Income

Situation: Sarah earns $95,000, buying first investment property for $550,000.

Recommendation: Personal name

Why: She'll benefit from negative gearing against her salary. She's in a moderate tax bracket. No need for complexity yet. The property will likely be negatively geared initially, and she wants those tax benefits now.

Scenario 2: Multiple Properties, High Income Family

Situation: Michael earns $250,000, wife Lisa is home with children. They have three properties worth $2.5 million total, all positively geared.

Recommendation: Family trust

Why: Income can be distributed to Lisa in a lower tax bracket. Properties are positively geared so negative gearing isn't relevant. Asset protection is valuable given Michael's high income. Estate planning flexibility is beneficial.

Scenario 3: Business Owner, Liability Concerns

Situation: Jenny runs a building business and wants to protect personal property from business risks.

Recommendation: Family trust (with corporate trustee)

Why: Strong asset protection — business creditors can't easily access trust assets. Income splitting possible with spouse. CGT discount preserved through distribution. Corporate trustee provides additional protection.

Scenario 4: Very High Income, Long-Term Hold

Situation: David earns $500,000+ from his medical practice. Buying a $3 million commercial property to hold for 20+ years.

Recommendation: Possibly company, or trust — get specific advice

Why: Commercial property is often positively geared from day one. Company flat rate may be attractive vs 47% personal rate. If no intention to sell, CGT discount irrelevant. But if there's any chance of selling, trust preserves CGT discount.

Can You Change Structure Later?

Yes, but it's expensive. Transferring property between structures typically triggers:

Stamp duty — as if you were buying the property again
Capital gains tax — on the transfer (market value rules apply)
Legal and accounting fees — for the restructure
Land tax implications — in some states

Example cost to restructure:

Property value: $800,000
Stamp duty: ~$31,000
CGT (if gain): variable, potentially $20,000-$100,000+
Legal/accounting: $3,000-$5,000

Total: $35,000-$135,000+

The message: get the structure right from the start. Consult an accountant before purchasing, not after.

Hybrid Structures

Some investors use combinations:

Trust with Company Beneficiary

Trust distributes income to a "bucket company"
Company pays 25-30% tax (caps tax rate for high earners)
Funds can be reinvested or loaned back to trust
Adds complexity but can be tax-effective

Multiple Trusts

Separate trust for each property
Better asset protection (one property's issues don't affect others)
Can help with land tax thresholds in some states
Significant compliance overhead

These strategies require specialist advice and are generally for larger portfolios.

Common Mistakes

1. Putting Negatively Geared Property in a Trust

If your property will run at a loss for years, the tax benefits are wasted in a trust. Those losses can't offset your personal income.

2. Using a Company for Residential Property

The lack of CGT discount usually makes companies unsuitable for residential investment property where capital growth is the goal.

3. Not Getting Advice Before Buying

Restructuring costs are massive. A $1,000 accountant consultation before purchase can save $50,000+ later.

4. Ignoring Land Tax

A structure that saves income tax but triggers higher land tax may not be worthwhile. Model the total cost.

5. Setting Up a Trust Without Understanding It

A trust requires annual compliance, distribution minutes, and ongoing management. If you won't maintain it properly, keep things simple.

Questions to Ask Your Accountant

Before deciding on structure, discuss:

Will this property be negatively geared? For how long?
What are the land tax implications in my state?
Do I have asset protection concerns?
Can I benefit from income splitting with family members?
What's my likely holding period?
What are the setup and ongoing costs?
How does this fit with my existing assets and structures?
What happens if my circumstances change?

Tracking Multiple Entities

If you do use trusts or companies, you need robust tracking:

Income and expenses per entity
Separate bank accounts
Distribution records
Loan tracking between entities
Consolidated portfolio view

Propperly supports properties held in personal names, trusts, and companies — track your entire portfolio regardless of structure →

Summary

If You...	Consider...
Are buying your first property	Personal name
Need negative gearing benefits now	Personal name
Have a positively geared portfolio	Family trust
Want income splitting with family	Family trust
Have asset protection concerns	Family trust (or company)
Are buying commercial property to hold forever	Company (maybe)
Want flexibility and estate planning	Family trust

Golden rules:

Get advice BEFORE you buy — restructuring is expensive
The "best" structure depends on YOUR situation
Simple is often better, especially starting out
Review your structure as your portfolio grows

Track properties across any structure with Propperly's Entity Management →

Last updated: January 2025. This guide is for general information only and does not constitute legal, tax, or financial advice. Structure decisions have significant implications — consult qualified professionals before making decisions.

Trust vs Company vs Personal Name for Investment Property Australia | Propperly