Property investment: Choosing a tax structure

Property investors have several choices of ownership structures Speak with an expert

Sole owner, co-owners, trust or super fund? Here are the pros and cons of some of the common scenarios.

Structure How does it work? When is this structure used?
Sole owner The owner declares all rental income, deductions and capital gains. Works well where one partner in a couple has a higher tax bracket and wants to take advantage of negative gearing.
Join tenants Joint ownership in equal proportions. Upon death the surviving partners take ownership of the property. Only suitable for related couples due to the estate planning implications. Should not be used by business partners.
Tenants in common Ownership split in any proportion agreed by the partners. Each partner can include their share in Works for unrelated joint investors (e.g. business partners) and for related couples who want to split in an uneven proportion (e.g. 80/20 or 60/40).
Unit trust A trust owns the property and the investor owns units in the trust. This structure is used where an investor wants to combine asset protection with the negative gearing.
Self Managed Super Fund (SMSF) Property is purchased using your current super plus borrowing if required. Borrowing must be limited recourse. A SMSF works best where the investor’s objective is to save for retirement. Also used where a small business wants to buy their business premises. See our article Use super to build your business.
Company A company pays tax at a flat rate of 30%. The investors would be directors and shareholders in the company. A company does not allow negative gearing and there is no 50% discount on capital gains. This makes it a poor structure for owning real estate
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