How to choose the right ownership structure for new property now

From 1 July 2027, most Australian investors will lose the 50% CGT discount and face tighter negative gearing rules, so the “best” ownership structure for a new property is the one that still works when those new settings fully apply. In practice, that usually means stress‑testing personal, trust, company and SMSF options for tax, asset protection, borrowing capacity and exit flexibility before you sign a contract.

Here’s the decision‑grade version you can act on this week.

Different ownership structures trade off tax, asset protection and borrowing power.

1. The new rules that actually change structure decisions

From the 2026–27 Budget measures and the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026:

1. 50% CGT discount largely replaced by indexation – from 1 July 2027, resident individuals and trusts generally lose the 50% discount; instead, post‑2027 gains are indexed for inflation (CPI) and then taxed, with a minimum 30% tax on many individual gains.
2. Negative gearing restricted for residential property – losses on many established rentals bought after 12 May 2026 will be quarantined or denied against wage and other income, while some new builds and larger vehicles are carved out.
3. Pre‑ and post‑2027 gains are split – assets held before 1 July 2027 will have their gains divided between an old‑rules portion (still potentially eligible for the 50% discount) and a new‑rules, indexed portion.

The upshot: you can no longer assume that “buy personally + rely on the 50% discount + full negative gearing” is the default best option.

For gearing basics under the new settings, see Plain‑English Gearing Basics Every Australian Property Investor Must Know.

2. Quick comparison: personal vs trust vs company vs SMSF

At‑a‑glance trade‑offs for new investments

Illustrative only – specific tax outcomes depend on your income, property type and future rule tweaks.

For high‑value or complex deals, cross‑check with How to structure high‑end property purchases the smart way.

3. When personal ownership still makes sense

Best for: simplicity, borrowing power, modest portfolios

Who it usually suits:

• First or second‑time investors with 1–3 properties in mind.
• Borrowers who need maximum serviceability for PPOR + 1–2 investments.
• People without major asset protection concerns (e.g. not in a risky profession or running a business).

Pros:

• Strongest borrowing power. Lenders assess you in your own name, with widest product choice and up to 90–95% LVR (with LMI).
• Lowest admin. One tax return, no separate entity compliance.
• Grandfathering. If you buy before key negative gearing dates, existing concessions may be preserved for that asset.

Cons under the new rules:

• Future gains after 1 July 2027 are taxed using CPI indexation with a minimum 30% tax for many individuals – less attractive for long‑term hold strategies than the old 50% discount.
• Less ability to income‑split capital gains or rent if you’re a high earner.
• Poor asset protection if you’re sued personally or your business fails.

Worked example – personal vs trust (high income)

Assume:

• New established investment, $900,000 purchase, 80% LVR interest‑only at 6.5% p.a.
• Rent $800 per week, other costs $8,000 p.a.
• 10‑year hold, 3% p.a. capital growth (roughly in line with RBA’s 2–3% inflation target).

After 10 years, value ≈ $1,209,000. Nominal gain ≈ $309,000. With 2.5% CPI, the real gain (after indexation) might be around $80,000–$100,000.

• In your own name at 45% marginal rate: tax ≈ 30–45% of the indexed gain (say $24k–$45k, depending on minimum tax mechanics and future marginal settings).
• In a trust distributing to a 24% beneficiary: tax ≈ 24–30% on the indexed gain (say $19k–$30k), but any rental losses may have been trapped in the trust during the hold.

The gap is narrower than the old world where you’d often only pay tax on half the gain. That’s why structure now leans more on asset protection and flexibility than pure CGT arbitrage.

4. When a trust is worth the extra work

Best for: family income splitting, asset protection, multi‑property plans

When a discretionary (family) trust is worth a hard look:

• You and a partner have materially different tax brackets now or in future.
• You’re a business owner or professional wanting to keep investment risk away from trading entities.
• You expect to build a portfolio where eventual sale strategy (who realises the gains, and when) matters as much as today’s deductions.

Under the updated rules, trusts offer:

• Capital gains flexibility. Even though the 50% discount is gone for most post‑2027 gains, you can still stream indexed gains to lower‑tax family members or a bucket company (subject to new minimum tax rules).
• Better ring‑fencing of risk. Tenants, lenders and business creditors have a harder time reaching personal assets if the trust is well‑structured.

But:

• Many residential rental losses will be quarantined in the trust and can’t help your personal tax bill.
• Banks and non‑banks often shade trust income for serviceability and may require extra guarantees and documentation.
• You carry higher annual accounting and legal costs, and the 2026–27 Budget foreshadows minimum tax on discretionary trusts, trimming some advantages.

For self‑employed and high‑income investors weighing trust vs personal ownership, pair this with Property strategy for self‑employed and high‑income investors after tax shifts.

5. Company ownership: niche but powerful in the right hands

Best for: development, flipping, or capped‑rate accumulation

A company can still work where:

• You’re doing short‑to‑medium‑term projects (e.g. small developments, flips) and want profits taxed at a company rate instead of top personal rates.
• You’re comfortable with no CGT discount at all – you’re playing the business game, not the passive long‑term investor game.
• You want strong asset protection around a project.

Key points under the new CGT and gearing rules:

• Companies never had the 50% CGT discount, so the reforms bite less here – but indexation and minimum tax rules still need to be watched.
• Pulling profits out can be expensive: franked dividends, Div 7A if you take money as loans, and potential double taxation.
• Lenders often cap LVRs and are pickier about company‑borrower deals, especially for residential property.

In most mum‑and‑dad investment scenarios, a simple trust or personal ownership outperforms a company on after‑tax, after‑admin basis.

6. SMSF ownership: powerful but only if super is the strategy

Best for: later‑stage investors with meaningful super balances

SMSFs sit somewhat outside the main CGT reform narrative because:

• Super already runs on a 15% tax on gains in accumulation and often 0% in pension phase (subject to transfer balance caps).
• Negative gearing is less attractive simply because the tax rate is lower; rental losses are stuck in the fund.

When it can work:

• You’re 45+ with strong super balances and want a single, long‑term asset held for retirement.
• You prioritise stable, rule‑bound tax treatment over flexibility and gearing power.

When to be cautious:

• Most lenders restrict LVRs (often around 70%), rates are higher, and limited recourse borrowing brings extra legal complexity.
• You can’t live in the property, and related‑party rules are tight.

For high‑end purchases in or alongside super, see How to structure high‑end property purchases the smart way.

Coordinated tax and lending advice helps lock in the right structure before you buy.

7. One‑week action plan before your next contract

Day 1–2: Clarify the deal and your risk profile

• Write down your next two deals, not ten‑year dreams (e.g. “$1.2m Sydney townhouse, long‑term hold” or “regional commercial shed, 7% yield, 5–7 years”).
• Note: expected hold period, active vs passive involvement, and whether you’re comfortable selling if rules shift again.

Day 3–4: Run the numbers under at least two structures

• Model cashflow and tax with and without generous negative gearing.
• Split potential gains into pre‑2027 and post‑2027 indexed portions for longer holds.
• Use simple scenarios: halve the old CGT discount benefits and assume quarantined losses for residential, as suggested in our portfolio stress‑testing guidance.

Day 5–7: Get coordinated advice

You want your CPA/tax adviser, solicitor and mortgage broker on the same page. A triple‑credentialled broker (CPA + Tax Agent + Broker) can often spot issues where tax, serviceability and asset protection collide.

• Ask your broker how each structure changes serviceability, lender choice and rate. See How Smart Mortgage Brokers Help Australian Property Investors Build Portfolios.
• Ask your accountant to compare after‑tax outcomes on exit, not just year‑one deductions.
• Ask your lawyer which structure best protects you from business and family‑law risks.

Then pick a default structure for the next purchase, with pre‑agreed triggers to review if legislation shifts again.

FAQs

What is the best structure to buy an investment property after the CGT changes?

There’s no one best structure, but for many Australians it will be a choice between personal name (simplicity and serviceability) and family trust (asset protection and income splitting on future indexed gains). Companies and SMSFs are more niche. The key shift is that you can’t rely on the old 50% CGT discount and full negative gearing, so you must model long‑term outcomes under the new rules.

Is a family trust still worth it now negative gearing is tighter?

Often yes, but for different reasons. Trusts are now less about juicing early‑year tax refunds and more about controlling who realises future capital gains and containing risk. You may lose the ability to offset trust rental losses against your salary, but you gain flexibility to stream future indexed gains and income. Whether that trade‑off is worth it depends on your family’s income mix and risk profile.

Should I put my next property in a company for tax reasons?

Usually not for a simple buy‑and‑hold residential investment. Companies don’t get a CGT discount, and pulling profits out can add another tax layer. They can work for active property businesses – like small developments or flips – where you want profits taxed at a company rate and strong project ring‑fencing. Most passive investors are better served by personal or trust ownership.

Does buying in an SMSF still make sense after the reforms?

The CGT and negative gearing changes mainly hit individuals and trusts, so SMSF rules are relatively more stable. SMSFs can be attractive for long‑term retirement assets, especially commercial property, but come with strict rules, lower LVRs and higher running costs. They rarely make sense purely for tax arbitrage on a standard residential investment.

How do these changes affect my borrowing capacity?

Structure affects both how lenders assess income and which lenders will play. Personal borrowing generally gives the highest capacity and widest choice. Trusts and companies introduce shading of income, extra guarantees and sometimes lower LVRs, while SMSF loans are the most restrictive. Always get a broker to run serviceability scenarios across structures before locking in an entity.

Key takeaways

• The removal of the 50% CGT discount and tighter negative gearing rules mean structure decisions now hinge on asset protection, exit strategy and serviceability, not just early tax refunds.
• For many, the real choice is personal vs family trust; companies and SMSFs are specialised tools for specific strategies.
• You must model pre‑ and post‑2027 gains separately and assume quarantined losses on many new residential investments.
• Coordinated advice from a CPA‑grade broker, tax adviser and lawyer before you sign a contract is now essential, not optional.

Next step: Book a free 15‑minute structure and borrowing strategy call at /contact to sense‑check personal vs trust vs company for your next purchase. Your tax, your loan, one expert – a CPA + Tax Agent + Broker in one consultation.

General advice only.