What is the best ownership structure for your investment?
Owning an investment property requires choosing an appropriate ownership structure: personal name, company, trust, or self-managed super fund (SMSF).
This article is general information only, not financial, legal or tax advice. Your circumstances matter, so speak to a registered tax agent, financial adviser or solicitor before you choose a structure.
Updated October 2026: the federal government has legislated changes to negative gearing and the capital gains tax (CGT) discount that start on 1 July 2027, and announced a minimum tax on discretionary trusts from 1 July 2028. We’ve updated each section below, and added notes on land tax, company tax rates and super contribution caps.
Each option comes with its pros and cons.
Personal ownership is simple and provides tax benefits but lacks asset protection. Company ownership offers limited liability and a fixed tax rate but requires setup and ongoing costs. Trusts provide asset protection and tax planning opportunities but involve complex administration. SMSFs allow pooling assets and tax benefits but are subject to strict regulations and limited personal interest in the property.
It’s essential to consult professionals and understand the advantages and disadvantages of each structure to make an informed decision for your property investment.
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Personal Name
Choosing to own an investment property in your personal name is a straightforward and prevalent approach. When you hold the property as an individual, the income and capital gains generated by the property are subject to taxation based on your personal marginal tax rate.
This ownership structure is often the easiest to set up and manage, but it is crucial to understand its advantages and drawbacks to ensure it aligns with your investment goals.
Put down that latte and get into property investment.
Pros:
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Simplicity: Owning a property in your name is straightforward, with minimal setup and ongoing administration.
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Tax Benefits: You can claim tax deductions for property-related expenses. Under current rules you can access the 50% capital gains tax (CGT) discount if the property is held for more than 12 months. From 1 July 2027, the discount is replaced by cost base indexation and a 30% minimum tax on real capital gains for individuals, trusts and partnerships, although gains that accrued before that date keep the 50% discount and eligible new builds can still choose the discount (see the 2026–27 Budget Statement 4).
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Easy to Understand: Personal ownership is a familiar and easily understandable structure, with clear tax implications.
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Low Costs: There are no costs to set up or maintain a separate entity, although you’ll still pay for conveyancing and your usual tax return.
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Land Tax Thresholds: Individuals usually get the full land tax threshold. In Queensland, for example, individuals pay land tax from $600,000 of taxable land value, compared with $350,000 for companies and trustees (see the Queensland Revenue Office).
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Control: You have complete control over the property and investment decisions.
Cons:
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Unlimited Liability: Your personal assets, including your family home, are at risk if you’re sued or incur debt related to the investment property.
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No Tax Efficiency: The property’s income is taxed at your personal marginal tax rate, which may be higher than other structures like trusts or companies.
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Negative Gearing Limits: For established homes bought after 7:30pm (AEST) on 12 May 2026, net rental losses from 1 July 2027 can only be offset against residential property income and gains, not your wages. Excess losses carry forward. Properties held before that time, and eligible new builds, are exempt.
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No Flexibility: You can’t distribute income or capital gains to other family members or entities, limiting tax planning opportunities.
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No Asset Protection: Your personal assets are exposed to risks related to the investment property.
Joint Ownership
Purchasing property in a joint venture comes with both advantages and disadvantages. When you buy property jointly, you can pool resources with friends or associates to acquire investment property, which may lead to better borrowing power and shared financial responsibilities. However, it’s important to understand the pros and cons of this arrangement before making a decision.
It’s essential to establish a clear agreement outlining each party’s financial responsibilities, such as mortgage payments and ongoing costs, to avoid potential conflicts. Ensure all parties fully understand their rights and obligations before entering into a joint ownership arrangement.
Invest with a friend.
Pros:
- Shared Resources: Combining funds can lower barriers to entering the property market and make it easier to gather the required deposit.
- Higher Borrowing Power: Applying for a loan jointly can result in better borrowing capacity compared to individual applications.
- Shared Financial Responsibilities: When all parties agree on their financial obligations, ongoing costs can be divided evenly or according to a prearranged plan.
Cons:
- Potential Disagreements: Absence of a formal agreement regarding ongoing expenses can lead to disputes and conflicts between the parties involved.
- Unequal Contributions: If one party contributes more towards the deposit or ongoing expenses, resentment may arise if not appropriately addressed in the agreement.
- Difficulty in Exiting: Selling or transferring ownership can be more complicated in a joint venture, especially if one party wants to exit the investment while the other does not.
Company
A company is a separate legal entity that can own and manage assets, such as an investment property. Profits earned by the company are subject to the corporate tax rate, and any distributions to shareholders are typically in the form of dividends.
The pros & cons of setting up a company to invest in
Pros:
- Limited Liability: Shareholders’ personal assets are generally protected from the company’s liabilities.
- Flat Tax Rate: Companies pay a flat rate of tax, which can be lower than the top personal marginal tax rates. A company that mainly earns rent usually pays 30%, because the lower 25% base rate entity rate only applies when 80% or less of its assessable income is passive income such as rent (see the ATO).
Cons:
- Setup and Ongoing Costs: Companies require registration and ongoing administration, which can be costly and time-consuming.
- No CGT Discount: Companies are not eligible for the 50% CGT discount available to individuals.
- Land Tax: Companies often get a lower land tax threshold than individuals, depending on the state.
Trust
A trust is a legal arrangement where a person (the trustee) holds and manages property or assets on behalf of others (the beneficiaries). In the context of property investment, a trust can be set up to hold and manage the property for the benefit of the beneficiaries.
Is a trust the way to go?
Pros:
- Asset Protection: Trusts can provide a higher level of asset protection compared to personal ownership.
- Tax Planning Opportunities: The trustee of a discretionary trust can distribute income and capital gains among beneficiaries, potentially reducing the overall tax liability. The government has announced a 30% minimum tax on the taxable income of discretionary trusts from 1 July 2028, which will reduce this benefit.
Cons:
- Setup and Ongoing Administration: Trusts require formal setup, and ongoing administration can be complex and costly.
- Trustee Liability: The trustee is legally responsible for the trust’s actions and may be personally liable for its debts and obligations.
- Higher Land Tax: Many states tax land held in trust more heavily. In NSW, special trusts such as family and discretionary trusts get no land tax threshold (Revenue NSW). Victoria applies a trust surcharge to most trusts (State Revenue Office Victoria), and Queensland uses the lower $350,000 threshold for trustees.
- Rental Losses Stay in the Trust: A trust can’t distribute a loss to beneficiaries, so negative gearing benefits are limited.
Self-Managed Super Fund (SMSF)
An SMSF is a private superannuation fund that you manage yourself, subject to specific government regulations. Using a self-managed super fund (SMSF) to invest in property has grown in popularity in recent years. This approach allows you to pool your superannuation assets with other members (an SMSF can have up to six), potentially increasing your borrowing capacity. Any borrowing must be through a limited recourse borrowing arrangement. However, it’s essential to understand the pros and cons of this investment structure and comply with strict government guidelines.
Maybe setting up a Self-Managed Super Fund (SMSF) is for you
Pros:
- Pooling Assets: Combining superannuation assets with other parties can increase your borrowing capacity.
- Tax Benefits: Income in super is generally taxed at 15%, and the effective rate on capital gains falls to 10% for assets held more than 12 months, offering potential tax savings. Earnings on assets supporting a retirement phase pension can be tax free.
- Pre-tax Contributions: You can reduce your taxable income by making pre-tax (concessional) contributions to your SMSF, up to the cap of $32,500 a year from 1 July 2026 (see the ATO).
- Control Over Investments: SMSFs offer greater control over your superannuation investments.
Cons:
- Strict Guidelines: Purchasing property in an SMSF is subject to the ‘sole purpose’ test, ensuring the investment serves the best retirement interests of the parties involved.
- Limited Personal Interest: You can’t buy a residential property from, live in, or rent it to a related party such as a relative. Losses on the property stay in the fund and can’t be offset against your personal income.
- Non-liquid Asset: Your superannuation will be tied up in a relatively illiquid asset.
- Complexity and Costs: Organizing the purchase through an SMSF can be complex and costly.
The structure of your property investment can vary based on your long-term plans for the property. While borrowing together might be easier and more affordable for married couples, there could be tax advantages in borrowing in one partner’s name. Conversely, a company or trust structure may be more suitable for those looking to limit liability and protect interests in other assets.
Tax rules are changing too. The negative gearing and CGT changes start on 1 July 2027, with further legislation still being consulted on (see Treasury), so check how they apply to your purchase before you sign a contract.
This matter is quite complex, so it’s crucial to consult with your accountant, mortgage broker, and solicitor. Understanding the pros and cons of each structure, as well as your borrowing capacity under each option, will enable you to make the most informed decision for your property investment.
