Top Tips to Borrow in a Company Name for Investment

Borrowing in a Company Name: What It Means for Your Investment Loan

When you borrow in a company name for an investment property, the company becomes the legal borrower and owner of the asset, not you personally. This structure separates the property from your personal assets and may offer liability protection, though lenders treat company applications differently from individual borrowers.

In Glen Iris, where property values typically sit above the Melbourne metropolitan median, company structures appear most often with investors building multi-property portfolios or those operating a business that benefits from holding property within a corporate entity. The decision affects loan serviceability, rates, and how much you can borrow.

Why Lenders View Company Borrowers Differently

Lenders assess company loan applications based on the company's financial position rather than your personal income alone. The company needs demonstrable income, typically through trading activity or rental income from existing properties, to service the loan. Most lenders require personal guarantees from company directors, which means you remain personally liable for the debt despite the company structure.

Consider an investor who operates a consulting business through a company and wants to purchase a two-bedroom unit near Glen Iris station as an investment. The lender assesses the company's tax returns, profit and loss statements, and cash flow rather than relying solely on the director's personal salary. The company's rental income projections contribute to serviceability, but the director still provides a personal guarantee. The loan settles at a rate 0.20% to 0.50% higher than standard investment property loans for individuals, and the company pays the loan from rental income while claiming interest as a tax deduction against company income.

Investment Loan Features That Change Under Company Ownership

Company-owned investment properties face different conditions compared to loans held in personal names. Interest rates typically sit higher because lenders view companies as higher risk, and interest-only periods may be shorter or unavailable depending on the lender's policy.

Loan to value ratio limits often reduce to 70% or 75% rather than the 80% to 90% available for personal borrowers, meaning you need a larger deposit. Lenders Mortgage Insurance rarely applies to company loans, so staying within these lower LVR limits becomes essential. Some lenders exclude certain investment loan features like offset accounts or redraw facilities when lending to companies.

Tax Treatment and Negative Gearing Under a Company Structure

Companies cannot access negative gearing the same way individual investors can. When a company makes a loss on an investment property, that loss offsets other company income but cannot be claimed against personal income from salary or wages. The company tax rate remains flat, currently at either 25% or 30% depending on turnover, which differs from personal marginal tax rates that can reach 47% including the Medicare levy.

For Glen Iris investors in higher personal tax brackets, holding property personally often delivers better negative gearing benefits. Company ownership makes more sense when the company generates sufficient income to absorb the property losses, or when asset protection and succession planning outweigh the tax considerations. Capital gains in a company do not receive the 50% discount available to individual investors who hold assets for more than 12 months, which significantly affects long-term returns when you eventually sell.

When Company Ownership Makes Financial Sense

Company structures work well when you already operate a trading business, want to separate personal and business assets, or plan to build a portfolio where the company itself generates enough income to service multiple loans. Investors purchasing commercial property often use company structures, and some transition residential holdings into a company as their portfolio grows.

The structure adds complexity and cost. You pay annual ASIC fees, accounting fees for company tax returns, and potentially higher legal costs during property settlement. For a single investment property in Glen Iris purchased with a standard investment loan, the benefits rarely justify these ongoing expenses unless broader business or estate planning reasons exist.

Borrowing Capacity and Serviceability Calculations

Lenders calculate company borrowing capacity using net company income after expenses, including existing debt commitments. Directors may need to show personal income as well, particularly if the company is newly established or has limited trading history. Most lenders require at least two years of company financial statements, though some accept one year for well-established businesses with strong cash flow.

Rental income from the proposed investment property is assessed at 70% to 80% of the expected rent to account for vacancy and maintenance costs. If the company already owns investment properties, rental income from those contributes to serviceability as well. The personal guarantee means your personal financial position still matters, and lenders may assess your personal debts and living expenses when determining how much the company can borrow.

Alternative Structures: Trust Versus Company Ownership

Many investors compare company structures with family trusts or discretionary trusts when deciding how to hold investment property. Trusts distribute income to beneficiaries, which can provide tax flexibility that companies cannot offer. Trust loans generally attract similar rates and terms to personal investment loans, whereas company loans face higher rates and stricter conditions.

A trust structure may suit investors wanting to distribute rental income and capital gains across family members in lower tax brackets, while still protecting assets. Companies suit investors who want a clear separation between business operations and personal finances, or those planning to eventually sell the business including its property holdings. Discussing these structures with an accountant before applying for finance helps align the ownership structure with your broader financial goals, as changing structure after purchase involves transfer duty and legal costs.

How the 2026-27 Budget Changes Affect Company-Owned Investment Property

Recent federal budget changes to negative gearing and capital gains tax apply only to residential property held by individuals, not to companies or commercial property. Companies already could not claim rental losses against personal income, so the negative gearing changes announced in the budget do not directly affect company-owned residential investment property purchased after 12 May 2026.

Companies do not receive the 50% capital gains tax discount, so the shift to cost base indexation and the minimum 30% capital gains tax from 1 July 2027 also does not apply to company-owned assets. Company capital gains continue to be taxed at the company tax rate on the full gain, the same as before the budget announcement. For investors considering company structures in Glen Iris, these budget changes do not alter the tax treatment that already applies to company ownership.

You should speak with a tax adviser or accountant to confirm how these rules apply to your situation, particularly if you are weighing up personal ownership versus company ownership for a property purchased after the budget announcement.

Applying for an Investment Loan in a Company Name

The application process for a company loan requires additional documentation compared to personal loans. You need to provide company tax returns, financial statements prepared by an accountant, proof of company registration and ABN, and a company extract showing directors and shareholders. The lender assesses the company's trading history, current debts, and cash flow alongside the director's personal financial position.

Pre-approval takes longer for company applications because lenders require more detailed financial assessment. Settlement timelines are similar to personal loans once formal approval is granted, though you should allow extra time upfront for the lender to review company financials. AXTON Finance works with lenders across Australia who offer investment loan options for company borrowers, and can identify which lenders provide the most suitable terms for your company structure and property type.

Call one of our team or book an appointment at a time that works for you to discuss whether borrowing in a company name aligns with your investment strategy and how to structure your application for the strongest possible outcome.

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