Buying property through a trust has become an increasingly popular strategy among Australian investors — especially those looking to build long-term wealth, manage tax effectively, or protect assets.

But is it the right move for everyone?

Like any structure, using a trust to purchase property comes with both advantages and trade-offs. Understanding these can help you decide if it suits your investment goals, family situation, and financial plan.

Let’s break it down.

What Is a Property Trust?

In simple terms, a trust is a legal structure that holds assets (like property) on behalf of beneficiaries.

There are several types of trusts, but the most common used by investors is a discretionary (family) trust. In this setup:

• A trustee (individual or company) legally owns the property
• The beneficiaries (usually family members) can receive income or capital gains at the trustee’s discretion

Other structures include unit trusts, hybrid trusts, and SMSFs — each with different rules and benefits.

Key Pros of Buying Property in a Trust

• Asset Protection
  Property held in a trust is not directly owned by an individual. This can offer protection from personal legal claims, creditors, or business risks — especially valuable for business owners or professionals in high-risk industries.
• Tax Flexibility
  In a discretionary trust, income (including rental income and capital gains) can be distributed to beneficiaries in a way that minimises the overall tax bill. For example, income might be directed to a family member in a lower tax bracket.
• Estate Planning Advantages
  Trusts can help with intergenerational wealth transfer. Assets held in a trust typically don’t form part of your personal estate, which can simplify succession planning and reduce disputes.
• Income Streaming
  You can distribute income each year based on who needs it most — offering flexibility that direct ownership doesn’t allow.
• Long-Term Structuring
  Trusts can be part of a broader wealth-building plan — particularly for investors looking to hold multiple properties, involve family members, or build generational wealth.

Key Cons of Buying Property in a Trust

• No Negative Gearing Benefits
  If your property runs at a loss (e.g. interest and expenses exceed rent), that loss cannot be offset against your personal income in a trust structure — unlike when holding property in your own name.
• Higher Setup and Ongoing Costs
  Trusts require legal setup, a corporate trustee (optional but common), separate tax returns, and possibly ongoing accounting fees. This can make them less cost-effective for single-property investors.
• Limited Lending Options
  Some lenders have stricter criteria or reduced borrowing capacity when lending to trusts. You may also face slightly higher interest rates or require personal guarantees.
• Capital Gains Tax (CGT) Complexity
  Trusts don’t get the CGT main residence exemption, and some trust types may not qualify for the 50% CGT discount if structured incorrectly. Getting the tax side right is essential.
• Administrative Complexity
  Trusts come with legal obligations — including maintaining proper records, trust deeds, and compliance with ATO rules. It’s not a set-and-forget approach.

So, Who Should Consider Buying Property in a Trust?

A trust may be worth exploring if:

• You plan to build a larger property portfolio
• You want to involve family in the structure and income
• You value asset protection and long-term tax flexibility
• You can absorb the initial setup and ongoing accounting costs
• You’re working with a qualified accountant or adviser

It may not be suitable if:

• You’re buying your first or only property
• You rely heavily on negative gearing benefits
• Your situation is relatively simple, and the added complexity isn’t justified

How We Approach It at PropVest

At PropVest, we start with your end goal — then help you structure your property investment strategy accordingly. Whether you buy in your personal name, a trust, or a company structure, it needs to match your financial objectives, risk profile, and tax position.

We work closely with your accountant or legal adviser (or connect you with trusted professionals) to ensure the structure is not just compliant — but strategic.

Thinking of Using a Trust to Buy Property?

It’s a powerful tool — but only when used for the right reasons. If you’re considering buying your next property in a trust, we’ll help you weigh the pros and cons based on your circumstances and long-term goals.