How to Structure Your Investment Property Before Signing the Contract for Tax Savings and Long-Term Wealth

Many homeowners and property investors come to us with a common question: “I already own a home and I’m about to buy my first investment property — how do I make sure it’s structured properly?” At Investax, we always encourage our clients to reach out before signing any contract of sale for their investment property. Getting the structure right from the start can make a significant difference to your long-term wealth. The right setup can help reduce tax, protect assets, and maximise borrowing capacity — while the wrong one can lead to thousands of dollars in unnecessary tax and restrict your flexibility in the future.

In this article, we’ll walk you through key tax-planning steps to take before signing a contract on your investment property, explain how ownership structures like personal, joint, trust, or company ownership work, and show you what professional tax advice can achieve when planned early.

Why Property Structure Matters for Tax Planning and Long-Term Wealth

Not all structures suit everyone. Just because your friend owns an investment property through a trust doesn’t mean you should do the same. Every investor’s financial situation, income level, and long-term goal are different — and the wrong structure can easily turn a good investment into an expensive mistake. The structure you choose for your investment property can have long-lasting financial consequences. It determines how much tax you pay, how easily you can transfer or sell the property, and whether your personal assets are protected. 

At Investax, we often see clients who realise the impact of poor structuring only after it’s too late. For example, Dr Ahmed purchased his family home (principal place of residence) under his trading entity [Link], thinking it would make things simpler. Years later, when he decided to sell and buy a new home, he was hit with a large capital gains tax bill and had already paid substantial land tax over the years — all because his home was in the wrong structure.

In another case, Max followed his previous accountant’s advice to buy a negatively geared property under a trust structure. Unfortunately, this strategy not only prevented him from claiming the full benefit of his losses but also exposed him to higher annual land tax. By the time he came to us for advice, the property had already settled, and unwinding the arrangement would have been costly. These real-life examples show that getting your property structure right from the beginning is one of the most important parts of tax planning — and understanding how each structure works is just as critical as choosing the right one.

Different Ownership Structures and Their Tax Impact

Before buying your first investment property, it’s important to explore the main ownership structures available in Australia and how each can affect your tax outcome. The most common options include owning the property in your personal name, jointly with a spouse or partner, through a company, or under a trust. Each structure has its advantages and drawbacks depending on your income, future goals, and asset-protection needs.

Owning an investment property in your personal name is usually the simplest and most straightforward option. It allows you to claim full deductions for expenses and interest if the property is negatively geared, helping offset your taxable income. You also benefit from land tax thresholds in most Australian states. However, all rental income and future capital gains are taxed at your marginal rate, which may not be ideal if your income is high.

If you’re buying the property with your spouse or partner, you’ll also need to decide on the ownership percentage — whether it’s 50-50, 60-40, 70-30, or 80-20. A 50-50 split is generally set up as Joint Tenants, meaning that if one partner passes away, the other automatically inherits their share of the property without the need for a will. If you prefer any other percentage, the ownership must be structured as Tenants in Common. Investors often use different ownership percentages to maximise tax benefits from negative gearing by allocating a higher portion of ownership to the higher-income earner.

A Company structure is rarely ideal for holding long-term residential investment properties because companies are not eligible for the 50% capital gains tax discount available to individuals and trusts. While companies provide limited liability and can integrate easily with other business activities, they are generally more suitable for active property development rather than passive investment.

One advantage of using a company structure is its fixed tax rate — currently 25% for businesses with an annual turnover under $50 million. This can be beneficial for developers treating property projects as a business venture. In addition, companies are entitled to land tax thresholds in most Australian states, which can offer further savings depending on where the property is located.

A Trust structure, such as a discretionary family trust, can provide flexibility in distributing income to beneficiaries and strong asset protection benefits. However, trusts are not always suitable for negatively geared properties, as losses cannot be distributed to offset personal income. Trusts can also attract higher land-tax liabilities depending on the state. This is why professional tax advice is essential before deciding on a structure — the right setup can save you thousands, while the wrong one can be difficult and costly to unwind later.

SMSF Structure – Using Super to Buy Your First Investment Property

Buying property through a self-managed super fund (SMSF) has become an increasingly popular way for Australians to build wealth for retirement. You might be wondering, “Why would anyone buy their first investment property through an SMSF?” The answer often comes down to funding. Many people find they have enough money saved inside their super to cover the deposit and stamp duty, but not enough in their personal accounts — making an SMSF property purchase an accessible starting point for their investment journey.

Recently, we met Sarah, who purchased her first investment property through her SMSF. She moved her fund’s tax work to Investax from an online provider after realising that she needed more holistic advice that connected her property goals with her retirement planning. Sarah’s case reflects a growing trend — while low-cost online SMSF services can lodge returns, they rarely provide the strategic tax and structuring guidance investors truly need when property is involved.

An SMSF can provide unique tax advantages, including a 15% tax rate on rental income and potential capital-gains discounts after holding the property for more than twelve months. However, managing property inside an SMSF is more complex and costly than other ownership structures. The fund must be independently audited every year, and it must comply with strict superannuation and borrowing regulations. That’s why seeking specialist SMSF tax advice before purchasing is crucial — to make sure the strategy supports both your investment goals and your long-term retirement outcomes.

What’s Next?

Buying your first investment property is an exciting milestone — but getting the structure and tax planning right from the start is what truly sets successful investors apart. The decisions you make before signing the contract can shape your long-term financial outcomes, from tax savings and asset protection to borrowing capacity and wealth creation.

At Investax, we help clients make confident property decisions by assessing their personal circumstances, future goals, and funding options before purchase. Whether you’re considering buying in your name, jointly with a partner, through a trust, company, or SMSF, our team can guide you through the pros and cons of each structure to ensure your investment is set up for success.

We offer a 15-minute free consultation to discuss your tax, property investment and business needs. Book your complimentary consultation now.

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General Advice Warning

The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this page and on our website, Investax Group, its officers, representatives, employees and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.