---
title: Buying Property in a Company or Trust: Pros & Cons | GNT Finance
description: Family trusts, unit trusts and companies for property: land tax surcharges, no CGT discount, no main residence exemption and director guarantees explained.
url: https://gntfinance.com.au/guides/buying-property-in-a-company-or-trust/
section: guides
updated: 2026-09-02
author: Gorakh Timilsina, GNT Finance
---

# Buying property in a company or trust

**In short:** Holding property in a company or trust can give asset protection and flexibility in how income is distributed, but it costs you the capital gains tax 50% discount in a company, the main residence exemption in any structure, and often the land tax threshold. Lenders offer fewer products, price them higher and require personal guarantees from every director and beneficiary who benefits. Get accounting and legal advice before you sign a contract.

The structure question is genuinely hard to reverse. Changing the name on a title after settlement is a new transfer, which means duty again and potentially capital gains tax. This guide sets out what each structure does, what it costs, and how lenders react.

## The structures

### Discretionary (family) trust

A trustee holds the property for a class of beneficiaries and decides each year who receives the income. Nobody has a fixed entitlement.

- **Strength:** income can be distributed to whichever beneficiaries are on lower marginal rates that year, and the capital gains tax 50% discount flows through to individual beneficiaries.
- **Weakness:** losses are trapped in the trust. A negatively geared property produces a loss that cannot offset your salary; it is carried forward until the trust has income to absorb it. That rules the structure out for most negatively geared purchases. See [negative gearing explained](/guides/negative-gearing-explained/).

### Unit trust

Beneficiaries hold fixed units, so entitlements are proportional and known. Common where unrelated parties invest together, and the usual structure where a self managed super fund invests alongside someone else.

### Company

The company owns the property and pays tax on net income at the company rate.

- **Strength:** a flat rate rather than a marginal one, and a clean structure for genuinely commercial property.
- **Weakness:** **companies do not receive the capital gains tax 50% discount.** On a long-held growth asset that is usually decisive. Profits also reach you only as dividends, with top-up tax at your own rate.

### Company as trustee of a trust

Very common. The trust holds the property; a company acts as trustee so that role has limited liability and does not change when people do. The trust's tax treatment applies and the company holds nothing in its own right.

### Self managed super fund

A separate world with its own rules: limited recourse borrowing, a bare trust holding the asset, strict prohibitions on using the property yourself, and larger deposits. Read [the SMSF property investment guide](/guides/smsf-property-investment-guide/) and [SMSF loans](/services/smsf-loans/).

## What each structure costs you in tax

| | Individual | Discretionary trust | Company |
|---|---|---|---|
| CGT 50% discount on assets held over 12 months | Yes | Yes, flows to individual beneficiaries | **No** |
| Main residence exemption | Yes | **No** | **No** |
| Negative gearing against your salary | Yes | **No**, losses trapped in the trust | **No**, losses trapped in the company |
| Income splitting | No | Yes, at the trustee's discretion | Only via dividends by shareholding |
| Land tax threshold | Full | Reduced or lost in some states | Reduced in some states, grouping rules apply |
| Asset protection | Weakest | Strongest | Strong |
| Annual compliance cost | Lowest | Trust return, trustee company review fee | Company return and review fee |

### Capital gains, worked

You buy for $700,000, hold ten years and sell for $1,000,000. Buying and selling costs plus duty bring the cost base to about $740,000, so the gain is **$260,000**.

- **Individual on the 37% bracket plus 2% Medicare levy (39%):** the discount halves the taxable gain to $130,000. Tax: $130,000 × 0.39 = **$50,700**.
- **Discretionary trust distributing to that individual:** the discount flows through, so the same **$50,700**, though the trustee could split the gain across beneficiaries on lower rates and reduce it further.
- **Company at 30%:** no discount, so tax on the full $260,000 = **$78,000**, plus top-up tax at the shareholder's marginal rate when the profit is paid out as a dividend.

The company is roughly **$27,300 worse off** on this single sale, before the dividend step, and on a growth asset held for decades that gap compounds. The ATO's guidance is at [ato.gov.au](https://www.ato.gov.au/); read [capital gains tax on property](/legal/capital-gains-tax-on-property/) alongside it.

### The main residence exemption does not apply

If a company or trust owns the property, it is not anybody's main residence for tax purposes, so you cannot live in it and sell it capital gains tax free. That is why family homes are almost never held in a structure.

## Land tax is where structures bite hardest

This is the cost most people underestimate, because it is annual rather than one-off.

In Victoria, land held on trust is assessed under a **separate surcharge scale**. It starts at a taxable land value of **$25,000** rather than the $50,000 general threshold, and adds **0.375 percentage points** to the general rate on holdings from $25,000 to under $1.8 million. At $3 million and above the two scales are the same.

**Worked comparison.** A Craigieburn investment property with a site value of $400,000, held individually, attracts $1,350 plus 0.3% of the amount over $300,000 on the general 2024–2033 scale: $1,350 + $300 = **$1,650 a year**. Held on trust, it is assessed on the surcharge scale, which is materially higher at that land value.

Use the State Revenue Office's land tax trust calculator for your own figure and confirm the current scales at [sro.vic.gov.au](https://www.sro.vic.gov.au/). Our [land tax calculator](/calculators/land-tax-victoria/) and [land tax in Victoria explained](/legal/land-tax-victoria-explained/) cover the general rates.

**Other states differ, and some are harsher.** At the time of writing, a discretionary trust in New South Wales generally receives **no land tax threshold at all** and is assessed on the whole land value. Grouping rules for related companies and trusts also vary. Check the revenue office in the state where the land sits before you decide.

Foreign or absentee ownership adds further surcharges: Victoria applies an 8% foreign purchaser additional duty and a 4% absentee owner land tax surcharge, and a trust with a foreign beneficiary can be caught even where no foreign person actually receives anything.

## How lenders treat companies and trusts

The lending side is more restrictive than most buyers expect.

- **Fewer lenders.** A meaningful part of any panel does not lend to trusts or companies for residential property, and some accept a family trust with a corporate trustee but not a unit trust.
- **Higher pricing.** Expect a margin above the equivalent individual loan, and sometimes commercial rather than residential terms. Some deals end up with [private and non-bank lenders](/services/private-and-non-bank-lending/) or as [commercial property loans](/services/commercial-property-loans/).
- **Lower maximum LVR.** Commonly 80%, sometimes less, and lenders mortgage insurance is harder to obtain.
- **Personal and directors' guarantees are standard.** Every director of the trustee company, and usually every adult beneficiary who benefits, signs a personal guarantee for the whole debt. The asset protection you bought the structure for does not protect you from the lender. Read [guarantor legal responsibilities](/legal/guarantor-legal-responsibilities/).
- **More documents.** Trust deed and variations, company constitution, ASIC extracts, director identification, trust returns and financials. See the [documents checklist](/guides/home-loan-documents-checklist/).
- **Longer assessment.** Add one to three weeks, and build that into any finance clause.

Servicing is assessed on the people behind the structure, with the same 3 percentage point buffer. A trust does not create borrowing capacity: if you would not qualify personally, you will not qualify through a structure.

## When a structure genuinely makes sense

- **Positively geared or commercial property**, where trapped losses are not a problem.
- **Genuine asset protection needs**, typically business owners or professionals with real exposure. See [self-employed home loans](/guides/self-employed-home-loan-guide/).
- **Multiple family members** to distribute income between, particularly where some are on low rates.
- **Estate planning**, or unrelated investors buying together through a unit trust with fixed entitlements.

And when it does not: a single negatively geared residential property bought by one or two salary earners. Individual ownership is usually cheaper, simpler and better after tax. Compare the alternatives in the [investment property guide](/guides/investment-property-guide/) and [investment property loans](/services/investment-property-loans/).

## Frequently asked questions

### Should I buy an investment property in a family trust?

Only if the property will be positively geared, or you have a genuine asset protection or estate planning reason. A trust cannot pass losses to your personal return, so a negatively geared property wastes the deduction until the trust has income. Land tax is usually higher and lender options narrower.

### Do companies get the 50% capital gains tax discount?

No. Companies are not entitled to the discount, so the full gain is taxed at the company rate. On a $260,000 gain that is roughly $27,300 more tax than an individual on the 37% bracket would pay after the discount, before top-up tax when the profit is paid out as a dividend.

### Can I live in a property owned by my trust or company?

Generally you should not. The main residence exemption does not apply, so no capital gains tax relief is available on sale, and occupying a trust or company asset raises further tax questions including deemed benefits. For a self managed super fund the prohibition is absolute.

### Will I have to give a personal guarantee?

Almost certainly. Lenders require guarantees from every director of the trustee company and usually from adult beneficiaries who benefit. The guarantee covers the full debt. A structure's asset protection works against other creditors, not against the lender you signed the guarantee for.

### Can I move a property I already own into a trust later?

You can, but it is treated as a disposal and an acquisition: expect land transfer duty on the market value and a capital gains tax event, unless a specific concession applies. That is why the structure decision belongs before the contract. Speak to an accountant and a lawyer first.

## Talk to GNT Finance

We arrange lending for family trusts, unit trusts and corporate borrowers, and we will tell you which lenders will look at your structure and what it costs against buying in your own name. Bring your accountant's recommendation and we will build the loan around it. There is no cost to you for our home-loan service in most cases.

[Book a free consultation](/contact/) or call 0426 403 703.

*This page is general information only and not legal, tax or financial advice. Laws change — confirm current rules with the State Revenue Office, the ATO or a licensed professional.*