Entity types for property investment in Australia: individual, trust, company & SMSF compared

The entity you buy under affects how much tax you pay on rent, how capital gains are taxed when you sell, whether losses can offset your other income, and how exposed the property is to personal liability. Most investors buy in their own name without considering alternatives. Sometimes that is the right choice. Sometimes it costs tens of thousands over the life of the investment.

Why entity structure matters

Four ownership structures cover the vast majority of residential property investment in Australia: your personal name, a discretionary (family) trust, a company, and a self-managed super fund. Each one changes the numbers in meaningful ways. The tax rate on rental income, the discount you receive when you sell, the ability to offset losses against your salary, and the degree of protection from personal creditors all shift depending on which entity appears on the title.

The right structure depends on your income level, your investment timeline, whether you plan to sell or hold indefinitely, and whether asset protection matters to your profession. There is no universally correct answer, but there is usually a clearly wrong one if you do not run the numbers first.

Individual (personal name)

Buying in your own name is the simplest structure and by far the most common. Rental income and losses flow straight to your personal tax return. If the property is negatively geared, the loss offsets your salary immediately, reducing the tax you owe that year. After 12 months of ownership, any capital gain on sale qualifies for the 50% CGT discount.

There is no setup cost, no separate tax return, and no additional compliance. Your accountant adds a rental schedule to your existing return and that is it.

The downside is exposure. The property sits in your personal name, which means personal creditors can pursue it. You also cannot distribute rental income to family members in lower tax brackets. Every dollar of rent is taxed at your marginal rate, which for a high earner on $200,000 or more can mean 45 cents of every dollar going to the ATO.

Discretionary (family) trust

A discretionary trust lets the trustee distribute rental income each year to whichever beneficiaries are on the lowest tax rates. If your spouse earns less, or you have adult children with minimal income, the same rental profit can be taxed at 19% instead of 45%. Over a decade of positive cash flow, the difference adds up fast.

The trust also retains access to the 50% CGT discount when it distributes a capital gain to individual beneficiaries. And because the trust, not you personally, owns the property, it provides a layer of asset protection from personal creditors. For professionals in high-liability fields like medicine, law, or construction, this matters.

The trade-off is losses. If the property runs at a loss in the early years, those losses are trapped inside the trust. They cannot be distributed to offset your salary the way they can when you own personally. For a property that will be negatively geared for five to ten years, this is a significant cost. You can read more about how this works in our guide to buying through a trust.

Setup cost is typically $1,500 to $3,000 for the trust deed and corporate trustee. Ongoing accounting runs $1,000 to $2,000 per year.

Company

A company pays a flat 25% tax rate on rental income (base rate entity), regardless of how much it earns. For a high-income investor who would otherwise pay 45% on rent through their personal return, that is a 20 percentage-point reduction on every dollar of profit.

Losses carry forward inside the company and offset future company income. They cannot be distributed to reduce your personal tax. Profits are distributed as franked dividends, and the franking credit reduces the tax you pay personally when you receive the dividend.

The critical limitation is capital gains. Companies do not receive the 50% CGT discount. When the company sells the property, the entire gain is taxable at 25%. On a property that has doubled in value over 15 years, the difference between the company rate and the discounted personal rate can be hundreds of thousands of dollars.

Setup cost is around $1,500. Annual accounting and compliance runs $1,500 to $2,500. Companies are rarely used for residential property precisely because the missing CGT discount makes selling expensive. They can work for investors who genuinely plan to hold indefinitely and want the flat rate on rent.

SMSF (Self-Managed Super Fund)

An SMSF offers the lowest tax rates of any entity type. In the accumulation phase, rental income is taxed at 15% and capital gains at 10% (after the one-third CGT discount for assets held longer than 12 months). In the pension phase, both income and capital gains are taxed at 0%.

Those rates are compelling, but the rules are strict. You cannot live in the property. Borrowing requires a limited recourse borrowing arrangement (LRBA), which restricts what you can do with the asset until the loan is repaid. The property must meet the sole purpose test, meaning it exists purely to provide retirement benefits for fund members.

Setup and annual compliance costs run $3,000 to $5,000. The fund needs an investment strategy, an annual audit, and a dedicated bank account. It is a serious administrative commitment and is generally only worthwhile for investors with $300,000 or more in superannuation who intend to hold past age 60.

Deductions including depreciation still apply within the SMSF, reducing the 15% taxable income further during the accumulation phase.

Side-by-side comparison

Rates shown are for the 2025-26 financial year. SMSF CGT discount is expressed as effective discount: 33% in accumulation (10% tax vs 15% rate) and 100% in pension phase (0% tax). Company rate assumes base rate entity eligibility.

When to choose each entity

These are general starting points. Your accountant should confirm the numbers for your specific situation.

• •Individual: you earn under $120,000, this is your first investment property, and you want simplicity. The ability to offset losses against your salary and avoid compliance costs makes personal ownership the default for most first-time investors.
• •Trust: you earn over $180,000, have a spouse or family members in lower brackets, or want asset protection from a high-liability profession. The income distribution flexibility and CGT discount make trusts attractive once the property turns positively geared.
• •Company: you earn over $180,000, plan to hold indefinitely without selling, and want the flat 25% rate on rental income. Rarely the right fit for residential property because the absence of the CGT discount penalises you heavily on exit.
• •SMSF: you have $300,000 or more in super, plan to hold the property past age 60, and are comfortable with compliance requirements. The tax rates are the best available, but the restrictions and costs are real.

How ProfitPie compares entity types

ProfitPie Pro lets you model the same property across all four entity types side by side. It calculates the different tax treatment, the CGT outcome on sale, and the 30-year wealth projection for each structure. You can see exactly where a trust overtakes personal ownership, whether a company makes sense for your holding period, and what the SMSF numbers look like in both accumulation and pension phases.

Individual investors can use the entity comparison to stress-test their own decision. Buyers' agents use it to show clients the financial impact of each structure before settlement, which removes a common source of post-purchase regret.

Common questions