Why More Australians Are Using Trusts for Property Investment in 2025

Not long ago, trusts were seen as something only the wealthy used—complicated structures reserved for high-net-worth families or businesses with multi-million-dollar assets. But times are changing. In 2025, we’re seeing more everyday Australians buying their investment property or passive income assets—like shares, ETFs, and even crypto—through a trust structure.

So what’s behind this shift? Put simply: Australian investors are becoming more financially savvy. They’re looking for smart, strategic ways to minimise tax, protect assets, and plan for future generations. A trust isn’t just a tax tool—it’s a flexible structure that offers long-term control, security, and peace of mind.

Whether you’re an employee, a business owner, or somewhere in between, a trust might be the key to unlocking a better investment future.

What Is a Trust?

A trust is a legal arrangement where one party (the trustee) holds and manages assets on behalf of another party (the beneficiaries). Think of it as a special container: you put assets into the trust, and the trustee makes decisions about those assets for the benefit of others/beneficiaries.

There are different types of trusts, but for investment purposes, the most common is a discretionary trust. In this setup, the trustee has the discretion to decide how income and capital gains are distributed among beneficiaries each year. The trust itself doesn’t pay tax on its income, provided that income is distributed—rather, the beneficiaries do, based on their individual tax rates.

Setting up a trust requires a trust deed, a trustee (which can be you or a company you control), beneficiaries (usually family members), and a tax file number (TFN) and ABN if it’s earning income.

Should You Buy Your Next Investment Property Through a Trust?

More investors are realising that trusts offer benefits that personal ownership simply can’t match. Here’s why:

1. Income Splitting for Tax Minimisation

One of the most powerful features of a discretionary trust is the ability to distribute income to family members on lower tax brackets. For example, if your spouse or adult children are earning little or no income, you can direct trust income to them and reduce your overall tax burden.

2. Capital Gains Distribution

The same flexibility applies when the trust sells an investment and realises a capital gain. If the capital gain qualifies for the 50% CGT discount (after holding for 12 months), the remaining amount can be split among beneficiaries to reduce the tax impact.

3. Asset Protection

Assets held in a properly structured trust are generally protected from personal liabilities or legal claims against an individual beneficiary. This is particularly important for business owners, professionals, or anyone in a high-risk industry.

4. Estate Planning and Intergenerational Wealth

Because the trust owns the asset—not the individual—passing assets on to the next generation becomes easier and more tax-effective. You don’t have to transfer ownership (and trigger CGT or stamp duty). Instead, you control the succession of the trust through appointors and updated deeds, all while maintaining asset protection for your children.

I’m Just an Employee—Why Would I Need a Trust?

This is a common question, and the answer might surprise you.

Whether you’re an employee or a business owner, the trust structure can work for you. It’s not about your job—it’s about options and flexibility.

When you own property or shares in your personal name, all income and capital gains stick to you. You can’t redirect that income to your low-income spouse or adult children. If your investment suddenly generates positive cash flow, you’re taxed on all of it. If the property booms in value and you sell, the capital gain is all yours to declare—regardless of your income bracket.

With a trust, that story changes. You gain control over how income and capital gains are distributed. You get a better structure for protecting your assets. And perhaps most importantly, you create a platform for long-term planning. Because investing isn’t just about today—it’s about building something that lasts.

Can a Trust Actually Help You Borrow More?

This is arguably the most important consideration—and often the biggest misconception.

Many people believe it’s harder to borrow money in a trust. And yes, in some cases, lenders may scrutinise trust applications more than individual ones. But with the right structure, and when guided by an experienced mortgage broker, trusts can actually help with borrowing and long-term portfolio growth.

Here’s how:

• Liability Isolation: When you buy an investment property under your personal name, any associated debt appears on your credit file. This can limit your ability to borrow for future purchases. However, if your trust is positively or neutrally geared (meaning it’s not running at a loss), some lenders may ignore the trust’s liability when assessing your borrowing capacity. This gives you more flexibility in future borrowing.
• Structure Expansion: Buying all properties in personal names eventually becomes restrictive—especially for ambitious investors. Using trusts allows you to segment your portfolio, which is not only useful for tax and asset protection, but also beneficial for working with brokers who know how to optimise borrowing capacity across structures.
• Debt Planning: Trusts also help with debt recycling strategies, where you can structure loans to maximise tax-deductible interest while building wealth outside your personal name.

So, while not all lenders treat trusts equally, working with the right team—your accountant and mortgage broker—can make trust borrowing just as effective (if not more) than borrowing personally.

Are These So-Called “Disadvantages” of a Trust Really Disadvantages?

You’ll often hear people say trusts come with too many downsides—but are those really disadvantages when you step back and look at the bigger picture?

Let’s explore the most common concerns and put them into context:

1. Setup Costs – A Price for Control and Flexibility

Yes, setting up a trust with a corporate trustee will typically cost between $2,500 and $3,500, depending on your provider and the complexity of the structure. But when you’re investing in a $500,000+ property with the intention of holding it long-term, the upfront cost becomes negligible compared to the benefits—especially if the structure helps you reduce tax by tens of thousands of dollars over the years. It’s a one-time cost for a lifetime of flexibility.

2. Annual Accounting Fees – Less Than 0.5% of Your Asset Value

Trusts are required to prepare annual financial statements and tax returns, and yes, this costs more than a basic individual return. But for most standard trust structures, the annual accounting fee is typically less than 0.5% of your total investment value. And here’s the kicker: it’s 100% tax deductible. So, is it really a disadvantage, or just a cost of doing things right?

3. Land Tax – A Manageable State-Based Cost

One common concern is that trusts don’t always receive a land tax threshold—particularly in states like NSW and Victoria, where the threshold for individuals doesn’t apply to trusts. However, in the grand scheme of things, land tax is a deductible expense, and it only becomes an issue once you start acquiring multiple or high-value properties. In some cases, land tax exposure can be managed strategically with proper planning, multiple structures, or different ownership pathways.

4. Trapped Losses – Temporary, Not Terminal

Discretionary trusts can’t distribute losses to beneficiaries, which means any negative gearing losses are trapped in the trust and carried forward to offset future profits. While this might seem like a downside, it’s not a lost benefit—it’s just deferred. Once your property becomes positively geared or when you sell it for a gain, those earlier losses can be used to reduce tax within the trust. Again, it’s a timing issue, not a permanent disadvantage.

What’s Next?

Using a trust for your next investment property or passive asset is no longer just a strategy for the wealthy—it’s a smart move for everyday Australians who are thinking long term. If you’re looking to minimise tax, protect your assets, and plan for the next generation, a trust structure might be the right fit for you.

At Investax, we help individuals, families, and business owners structure their investments with clarity and confidence. From setting up the right trust to navigating borrowing strategies and ensuring full ATO compliance, our experienced team is here to support you every step of the way.

Get in touch with Investax today to find out whether a trust is the right structure for your next property or investment decision. Let’s make your future investments smarter, safer, and more strategic.

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