The 2026 Australian Budget changes the tax rules on property investment from mid-2027. Negative gearing will only apply to new builds, the 50% capital gains tax (CGT) discount is being replaced, and discretionary trusts face a new 30% minimum tax rate from July 2028. These aren’t small tweaks — they shift which ownership structure actually makes financial sense right now.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
Whether you buy alone or with a business partner, the structure you choose decides how much tax you pay, what deductions you can claim, and how easily you can exit. The old rule of thumb — stick it in a trust or company — no longer holds the same advantage. Here’s what you actually need to know.
What the Research Reveals About Buying Solo vs With a Partner
I tend to look at these numbers and think: the default answer for most people buying residential property in Australia right now is individual or joint ownership, especially if you’re buying a new build. Trusts and companies still have a place, but you need a specific reason — asset protection, estate planning, or development activity — to justify the extra cost and complexity.
If you’re comparing structures, it’s worth weighing the borrowing implications of each option before you commit — lenders assess serviceability differently when multiple parties or trust structures are involved.
What Each Ownership Structure Actually Costs You
Purchase price is only the start. The ownership structure you pick determines your tax rate, your access to the CGT discount, your annual compliance costs, and — if you’re buying with someone else — how the equity is split and what happens if one of you wants out.
Here’s how the four main structures compare on a $1,000,000 established property over seven years, assuming 80% interest-only financing at 6%, a 5% rental yield, and 5% annual growth in costs and values:
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| Structure | Estimated 7-Year Profit | CGT Discount Access | Annual Compliance Cost | Best For |
|---|---|---|---|---|
| Individual or Joint | $370,501 | Yes (50% or new inflation method) | Low (personal tax return) | Most residential investors, especially new builds |
| Discretionary Trust | $356,483 | Yes, but 30% minimum tax from July 2028 | Moderate–high (trust return, accounting) | Asset protection, estate planning, family control |
| Company | $256,808 | No | Moderate (company return, ASIC fees) | Developers, business operators, high-income retainers |
| SMSF | $308,491 | Yes (one-third discount) | High (audit, actuarial, admin costs) | Long-term retirement-focused investors |
The difference between individual and company ownership is over $113,000 in this model — and that’s before you add stamp duty, selling costs, or any state surcharges. For context, buying as joint tenants with an Australian citizen spouse can save a foreign buyer more than $60,600 in FIRB fees and surcharges compared with buying as tenants in common.
If you’re buying with a partner and one of you is a foreign national, the way you hold the title determines whether you need FIRB approval — and that decision alone can cost more than a full conveyancing fee.
Where Buyers Trip Up on Ownership Structure
Treating joint tenants and tenants in common as interchangeable
Joint tenancy means equal shares and right of survivorship — if one owner dies, the property passes automatically to the other. Tenancy in common allows unequal shares and each owner can will their portion separately. For FIRB purposes, only joint tenancy qualifies for the spousal exemption. A foreign buyer who picks tenants in common thinking it doesn’t matter may face a $15,600+ FIRB application fee and a state surcharge on their share. The distinction isn’t minor — it’s a five-figure difference.
Using a company to hold residential property for long-term growth
Companies cannot access the CGT discount of any kind. The model shows company ownership producing $256,808 versus $370,501 for individual or joint — a gap of $113,693 over seven years. Companies also add ASIC fees, separate tax returns, and higher governance obligations. The only situation where a company makes sense for property is if you’re developing, flipping, or retaining profits inside the entity for reinvestment. For buy-and-hold, it’s the weakest option on the table.
Ignoring the 2028 trust tax change when setting up now
The 30% minimum tax on discretionary trusts kicks in from 1 July 2028. If you establish a trust today expecting the old low-tax flexibility, you’ll be locked into a structure that costs more annually and delivers a smaller after-tax return than individual ownership. Trusts still offer asset protection and estate planning benefits, but the pure tax case is gone. My first move would be to model the trust’s projected profit after 2028 before paying the setup costs.
Skipping a written co-ownership agreement
Buying with a business partner or friend without documenting how costs, equity, and exits are handled is common — and expensive when things change. A clear agreement should state ownership shares (tenants in common percentages), who pays what share of the mortgage, repairs, and insurance, and what happens if one party wants to sell, refinance, or stop paying. Without it, you’re relying on default property law, which may not reflect your actual arrangement. If you need a solid contract foundation, business law advice on co-ownership agreements is worth budgeting for before you sign.
Choosing and Setting Up Your Ownership Structure
Match the structure to the property type
From 1 July 2027, negative gearing is only available for new builds. If you’re buying an established property after that date, rental losses cannot be offset against your salary — they’re quarantined. That changes the calculus significantly. Individual or joint ownership of a new build gives you negative gearing access plus the CGT discount. For an established property, the tax advantages shrink regardless of structure, so the decision shifts toward long-term capital growth and borrowing capacity rather than annual tax deductions.
Get the FIRB pathway right for mixed-nationality purchases
If you’re a foreign national buying property in Australia with an Australian citizen or permanent resident, the FIRB spousal exemption applies only when you hold the property as joint tenants. You also need to check your state’s stamp duty surcharge rules. In NSW, the 9% surcharge may still apply to the foreign spouse’s beneficial interest unless they meet the exempt permanent resident conditions (200 days physical presence, principal place of residence, eligible visa). In Victoria, the 8% FPAD is waived for principal place of residence purchased jointly with an Australian citizen if occupied within 12 months. Investment properties don’t qualify for the Victorian exemption. Planning where you’ll live — not just what you’ll own — affects the surcharge bill.
Draft a co-ownership agreement that covers the hard scenarios
A co-ownership agreement should cover: who contributes what to the deposit, how mortgage payments are split, what happens if one person can’t pay for three months, how major decisions (refinancing, renovating, selling) are voted on, and a clear exit process including valuation method and timeline. Tenants in common is usually the better structure for non-couple buyers because it allows unequal shares and each party can sell or will their portion independently. If you’re buying with a business partner, a solicitor experienced in property transaction law for co-ownership can draft the agreement before settlement — not after a dispute arises.
The 2027–2028 transition timeline and what it means for your decision now
Two key dates change the math. From 1 July 2027: negative gearing restricted to new builds; 50% CGT discount replaced by an inflation-based discount with a minimum 30% tax on gains. From 1 July 2028: discretionary trusts face a 30% minimum tax rate. If you’re buying before July 2027, you can still claim negative gearing on an established property under current rules — but you need to hold it past the change date to understand your ongoing position. If you’re setting up a trust now, factor in the 2028 rate from day one rather than assuming the old flexibility will last.
Frequently Asked Questions
Can I buy property with a business partner who isn’t a relative? ▾
Does the FIRB spousal exemption apply to de facto partners? ▾
What happens if my business partner wants to sell and I don’t? ▾
Is an SMSF a good option if I’m buying with a business partner? ▾
Does the 30% trust tax apply to all trusts, or only discretionary trusts? ▾
The Structure You Pick Now Locks in Your Tax Position for Years
The 2026 Budget doesn’t just change the rules for future purchases — it changes the logic of how you should structure a property investment in Australia from today. Individual or joint ownership is the strongest default for most residential investors, especially on new builds. Trusts and companies still have specialised uses, but the cost of getting the structure wrong — whether through lost CGT discounts, unexpected surcharges, or locked-in tax rates — is higher than it was before the Budget.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read Building vs Buying in Australia: Pros, Cons and Financial Reality.
Sources and Further Reading
Why More Australians Are Exploring Lease Options as a Property Strategy — Looks at alternative paths into the market when standard ownership structures don’t fit.
Beyond Bricks & Mortar: The Untapped Potential of Alternative Property Investment in Australia — Explores options beyond direct residential ownership for investors with different goals.
EduYush (2026). Best Property Investment Structure Australia After Budget 2026. 🔗
PropertyCosts (2026). FIRB Spousal Exemption: Complete Guide to Buying Property with an Australian Partner (2026). 🔗
Smaver (2026). Buying Solo, With a Partner or With Family Help. 🔗
Original Wealth (2026). Steps to Buy a Property with a Partner or Friend. 🔗
Australian Taxation Office. CGT Discount Rules. 🔗
Australian Taxation Office. SMSF Tax Rules. 🔗
