Buying Property in a Trust: Pros, Cons & Loan Options

Buying property through a trust is a common strategy for Australian investors seeking tax flexibility, asset protection, and estate planning benefits. But trust structures add complexity to the loan process.

Types of Trusts for Property

Discretionary (Family) Trust: Trustee decides how income is distributed among beneficiaries. Most flexible for tax planning.

Unit Trust: Fixed entitlements based on unit holdings. Better for joint ventures.

Hybrid Trust: Combines elements of both.

Advantages of Buying in a Trust

• Income distribution flexibility — allocate rental income to lower-income beneficiaries
• Asset protection — property is owned by the trust, not you personally
• Estate planning — easier succession than personal ownership
• Land tax threshold — some states offer trust-specific thresholds
• Capital gains distribution — CGT discount can be allocated to beneficiaries

Disadvantages

• No negative gearing to personal income — trust losses stay in the trust
• Higher loan rates — lenders charge 0.1-0.5% premium
• Lower LVR — typically 80% max (vs 95% for personal)
• Setup and maintenance costs — $2,000-5,000 to establish, $1,000-2,000/year
• Limited lender options — not all lenders lend to trusts
• No first home buyer benefits — government schemes are for individuals

Trust Loan Requirements

Lenders typically require:

• Trust deed (reviewed by their legal team)
• Corporate trustee details (if applicable)
• Personal guarantees from all directors/trustees
• Standard income documentation for all guarantors
• Trust financials if existing trust

Which Lenders Accept Trust Structures?

Most major banks will lend to trusts, but policies vary significantly. Second-tier and specialist lenders often have more flexible trust lending policies.

A mortgage broker who understands trust structures can match you with the right lender.

FAQs

Is it better to buy property in a trust or personally?

Depends on your goals. Personal ownership is simpler and allows negative gearing. Trust ownership offers flexibility and protection.

Can a trust get a home loan?

The trust itself borrows, but trustees/directors provide personal guarantees.

Do I pay more interest with a trust loan?

Usually a small premium (0.1-0.5%), but not always.

Can a trust access first home buyer benefits?

No. FHOG, stamp duty exemptions, and other FHB schemes are for individual purchasers.

Explore trust and company loan options or book a strategy call.

Last updated: April 2026