Australian Property Investment Structures: Individual, Trust, SMSF, or Company — An Overview

One of the most consequential decisions an investor makes is not which property to buy — it's what structure to buy it in. The structure determines how rental income is taxed, how capital gains are treated, what happens to the asset if the investor faces a legal claim, and how the asset passes to the next generation.

This article provides an overview of the four main structures used by Australian property investors. It is not a substitute for advice from a qualified accountant or solicitor who understands your specific position.

Individual ownership

Purchasing property in your own name is the simplest structure. Rental income is taxed at your marginal rate. If you hold the property for more than 12 months, capital gains are subject to the 50% CGT discount for individuals — meaning only half the gain is added to your assessable income in the year of sale.

Negative gearing losses — where deductible expenses exceed rental income — can be offset against other income, reducing your overall tax liability. This makes individual ownership particularly effective for investors in higher marginal tax brackets holding growth-oriented assets in the short-to-medium term. The limitation is asset protection: property held in your own name is exposed to personal creditor claims.

Discretionary (family) trust

A discretionary trust allows the trustee to distribute income — including rental income and capital gains — among a class of beneficiaries in a tax-effective manner. Trusts also provide a degree of asset protection: property held in a trust is generally not an asset of individual beneficiaries.

The trade-offs: trusts cannot directly access the 50% CGT discount (though individual beneficiaries can when gains are distributed), trust losses are trapped in the trust, and some states apply land tax surcharges to trust-held property.

Proposed change from 1 July 2028 — subject to legislation: The 2026–27 Federal Budget proposed a 30% minimum tax on income distributed through discretionary trusts. If enacted, this would substantially reduce the income-splitting advantage that makes family trusts tax-effective for investors in different marginal tax brackets. A three-year rollover relief window has been proposed to allow existing structures time to adjust. As at mid-2026, the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 has not passed both Houses of Parliament, and the form of the legislation may change subject to Senate negotiations. CPA Australia has publicly stated that its members cannot provide definitive tax structure advice until the bill is passed. Anyone currently considering establishing a discretionary trust for property investment should seek advice from a qualified tax specialist who is actively monitoring the bill's progress through Parliament.

Self-managed superannuation fund (SMSF)

Property held inside an SMSF benefits from superannuation's concessional tax treatment: rental income is taxed at 15% during the accumulation phase, and capital gains on assets held more than 12 months attract a one-third discount — effectively 10% CGT. In the pension phase, both income and capital gains may be tax-free.

Regulatory requirements are stringent. SMSF property must meet the sole purpose test, must not be acquired from or leased to a related party (with limited exceptions for business real property), and must be purchased at arm's length. An SMSF is a long-term structure unsuitable for investors who may need capital access in the short term.

Company

A company pays the corporate tax rate — currently 25% for base rate entities — on net rental income, which is lower than the top individual marginal rate of 47% (including Medicare levy). The significant limitation is capital gains: companies do not access the 50% CGT discount. For investors focused on capital growth rather than yield, this is a material disadvantage.

The right structure depends on your position

There is no universally optimal structure. The right answer depends on your marginal tax rate, personal liability exposure, investment horizon, whether you are investing individually or with a partner, your estate planning objectives, and whether superannuation is an appropriate vehicle for the capital you intend to deploy. A qualified accountant who specialises in property investment can model the after-tax outcomes of each structure against your specific position.

General information only. Tax laws change frequently. Consult a registered tax agent, accountant, or solicitor before making any structural decision regarding your investments.