Choosing the right structure for your investment property
How you hold your investment property affects your tax outcomes, CGT position, access to negative gearing, and asset protection. There is no single right answer — the best structure depends on your circumstances.
Owning in your own name (or jointly with a partner)
Pros:
- Simplest structure — no setup or ongoing administration costs
- Full access to negative gearing losses against your personal income
- 50% CGT discount after 12 months (for individuals)
- Easiest to finance (lenders prefer individual borrowers)
- Depreciation flows directly to your tax return
- No asset protection — the property is exposed to personal creditors
- Income is taxed at your marginal rate (potentially 47% including Medicare levy)
- All growth is in your name, which can affect means-tested benefits
Owning through a discretionary (family) trust
Pros:
- Asset protection from personal creditors (the trust, not you, owns the property)
- Income flexibility — you can distribute rental income to family members in lower tax brackets
- Potentially lower overall tax through income splitting
- Access to the 50% CGT discount (trusts can pass the discount to individual beneficiaries)
- Trusts cannot offset negative gearing losses against other income. Trust losses are quarantined inside the trust and can only be used against future trust income
- Ongoing administration — annual accounting, tax returns, and trust compliance costs
- Lenders treat trust borrowing differently — sometimes harder to finance
Owning through a company
Pros:
- Asset protection from personal creditors
- Company tax rate (25% base rate for small companies, 30% for larger) may be lower than your personal marginal rate
- Good for high-income earners with well-performing properties
- Companies do not get the 50% CGT discount — all capital gains are taxed in full at the company rate
- Cannot access negative gearing against your personal income
- Dividends from company profits are taxable when distributed
- More complex and costly to administer
SMSF
Property held in a self-managed super fund is a separate consideration with its own rules — see our SMSF property guides for detail.
The right answer depends on your goals
- If you need negative gearing losses now: personal name is usually best
- If you want asset protection and income splitting: consider a trust
- If you want a flat tax rate on profits and no need for negative gearing: company may suit
- Always seek advice from a tax advisor before choosing your structure — the wrong choice can cost significantly more than the advice fee