Do You Know How Trust & Company Purchases Work?

Why Empty Nesters Choose Trust and Company Structures

Buying property through a trust or company structure gives you control over how assets are held, protected, and eventually passed on. Many empty nesters move property into a family trust to separate personal assets from investment holdings, or use a company structure when purchasing with adult children as co-investors. The decision often stems from wanting clarity around asset protection, tax treatment, or succession planning now that your financial picture has shifted.

Consider someone who sold the family home and wants to buy two properties: a downsized residence and an investment. Holding the investment through a discretionary trust means rental income can be distributed to beneficiaries in lower tax brackets, and the asset sits outside the personal estate. The residential property stays in personal names for capital gains tax exemption purposes. This kind of structural split reflects the stage of life you're in, where flexibility and forward planning matter more than simplicity.

How Lenders Assess Trust and Company Applications

Lenders treat trust and company applications differently from personal borrowing. They assess the individuals behind the structure, typically the directors or trustees, and require personal guarantees in most cases. The trust deed or company constitution must permit property ownership and borrowing, and lenders will review those documents before proceeding.

Your borrowing capacity is still based on personal income and expenses, not the trust or company itself. If the trust has an established income history, some lenders will consider distributable income, but most rely on the guarantors' financial position. Serviceability is calculated the same way it would be for a personal loan, but you'll need additional documentation including the trust deed, ABN registration, and minutes of trustee meetings authorising the purchase.

Deposit requirements can be stricter. Where a personal buyer might access a 90% loan with lender's mortgage insurance, trusts and companies are often capped at 80% unless the guarantors have strong financials. Some lenders won't lend to certain trust types at all, so understanding which lenders work with your structure matters before you start property search and shortlisting.

The Documentation You'll Need Before Settlement

Every trust or company purchase requires certified copies of the trust deed or company constitution, an ABN or ACN, and proof that the entity is registered and compliant. The trustee or director must provide identification, and if the trust is new, you'll need minutes showing the decision to purchase property and borrow funds.

For discretionary trusts, lenders want confirmation that the trustee has the power to borrow and provide security over trust assets. For unit trusts, they'll review the distribution of units. For companies, they'll check ASIC records and director details. If the structure was set up years ago and documents are outdated or missing, expect delays. We regularly see buyers who established a trust a decade ago and can't locate the original deed, which means engaging a solicitor to reconstruct or amend it before contracts exchange.

Stamp Duty and Tax Treatment Across Structures

Stamp duty is calculated the same way whether you buy in personal names, through a trust, or via a company. The property value determines the duty, not the ownership structure. However, some states apply surcharges if the trustee or company is classified as a foreign person, or if the beneficiaries aren't disclosed.

The tax treatment is where structures diverge. A family home held in personal names qualifies for the main residence exemption from capital gains tax. An investment property held through a discretionary trust allows income splitting, but capital gains are distributed to beneficiaries and taxed at their marginal rates with no 50% discount unless the trust has held the property for more than 12 months. Companies pay a flat corporate tax rate on both income and capital gains, with no discount.

Land tax thresholds also differ. In New South Wales, trusts don't receive the land tax-free threshold that individuals do, meaning investment properties held in a trust are taxed from the first dollar of land value. The structure you choose affects your ongoing holding costs and tax position, not just the upfront purchase.

When a Company Structure Suits Co-Purchasing with Adult Children

Buying property with adult children as co-investors often works through a company structure where each shareholder holds a defined percentage. This avoids the ambiguity of joint tenancy or tenants in common, and creates a formal governance framework if one party wants to exit or the property is sold.

In a scenario where you're contributing 60% of the deposit and your daughter is contributing 40%, a company structure with shares allocated accordingly protects both contributions. The company holds the property, takes out the loan, and rental income or sale proceeds are distributed based on shareholding. If your daughter later wants to buy you out, the share transfer is cleaner than changing names on a title held as tenants in common.

The company also provides liability protection if the property is used for business purposes or rented. If a tenant makes a claim, it's against the company, not the individuals. For empty nesters entering co-ownership arrangements with the next generation, this structure separates personal assets from the investment and sets clear expectations around contribution, control, and exit.

How a Buyers Agent Works with Your Accountant and Solicitor

Purchasing through a trust or company involves coordination between your accountant, solicitor, and buyers agent. The accountant advises on structure and tax position, the solicitor prepares the trust deed or company constitution and handles conveyancing, and the buyers agent identifies properties that align with the investment strategy your structure supports.

We work with your existing advisors to confirm the entity is ready to purchase before making offers. That means checking the trust deed permits property ownership, ensuring the company has borrowing capacity, and confirming the correct names appear on contracts. When finalising the sale, the contract must name the trustee or company exactly as it appears on the ABN registration, or settlement can be delayed.

If you're buying at auction, the bidder must have authority to act on behalf of the trust or company, and the deposit cheque must come from the entity's account or a solicitor's trust account. These details matter during auction bidding, and getting them wrong on the day means losing the property or facing penalties.

Should You Set Up the Structure Before or After Finding a Property

Set up the structure before you start looking. Lenders need time to assess the entity, and solicitors need time to prepare documentation. If you find a property and then scramble to establish a trust or company, you'll miss deadlines or lose the property to another buyer who can exchange contracts immediately.

The structure also influences which properties suit your strategy. If you're buying through a self-managed super fund trust, the property can't be lived in by you or related parties, which rules out certain residential purchases. If you're using a discretionary trust for income splitting, you'll focus on high-yield investments rather than low-rental prestige homes. Knowing your structure before defining your buyer brief keeps the search targeted and the timeline realistic.

Your accountant should finalise the structure, your solicitor should review the governing documents, and your lender should confirm borrowing capacity before you attend inspections or make offers. This front-loaded preparation removes risk and gives you confidence when moving quickly on the right property.

Frequently Asked Questions