When does it make sense to use a company to buy an investment property? 

You've built a successful career, and you're in a position to think seriously about your next property move, such as adding an investment property to your portfolio.

But here's a question you might want to consider: should you buy that investment property in your own name, or through a company structure?

Buying an investment property through a company is not as common as buying in your own name, but it is an option worth looking at if you are planning your next move. For many Melbourne professionals, a corporate structure can offer useful benefits in the right circumstances. It can also create extra costs and responsibilities, so it needs careful thought.

When buying an investment property in a company may suit you

Company structures aren't for everyone. There can be several benefits to buying an investment property through a company, but these will only be advantageous if you meet certain conditions. Each pro also has some disadvantages that you should consider.

A note on the “limitless borrowing” myth promoted online

It is also important to address a recent trend circulating on social media, where some online influencers claim that using a company or trust to buy property can unlock “limitless borrowing capacity”. This concept has gained traction but is not entirely accurate, and in many cases has prompted lenders such as Macquarie Bank and Commonwealth Bank to tighten their credit policies.

Despite what is often suggested online, banks do not ignore your personal financial position simply because the loan sits under a company or trust. Lenders apply full look-through assessments, require director guarantees, and aggregate your income and liabilities across all entities. Additional changes have been introduced to prevent borrowers from overextending themselves based on incorrect assumptions about how corporate structures work.

For investors, this means that while companies can still offer tax, governance or asset-protection advantages, they do not provide a shortcut to outright unlimited borrowing power. Understanding this upfront helps ensure your structure supports sound long-term strategy rather than relying on misleading online advice.

Potential income tax benefits

Disclaimer: This section contains general information about tax. Consult a qualified tax professional before making decisions.

Companies are taxed at a flat rate between 25-30% depending on turnover. 

This is often lower than the marginal tax rate of someone earning a six-figure salary, which can be up to 45% excluding the 2% Medicare levy (according to the tax rates for the 2025-26 tax year). 

Using a company to buy a property can potentially allow access to lower tax rates on rental income, which may appeal to professionals with stable income who want to build a structured investment plan.

However, if negative gearing is part of your strategy, it is important to note that companies do not receive the same tax treatment as individuals. Companies can't distribute losses to shareholders. If your investment property is negatively geared, those losses stay trapped in the company, carrying forward to offset future profits. For property investors who rely on negative gearing to reduce their current tax bill, this could be a disadvantage.

Asset protection

Many Melbourne investors think about company ownership when they want to protect personal assets. A company is a separate legal entity. If the company incurs liability related to the property (such as a tenant suing the landlord company), the liability is generally limited to the assets held within the company. Your personal assets, including your primary residence, your savings and your other private investments, are usually shielded from the company's debts.

A company structure can also be useful when you are planning to grow a portfolio. For some families with complex financial arrangements, company ownership keeps records simpler and prevents personal borrowing activity from becoming entangled.

But it is not a complete shield. Lenders often require personal guarantees for company loans from the director when securing a mortgage, especially if the company is newly established. This means that while the company shields you from operational risks, the mortgage debt itself will still personally expose you to risk with the bank.

Buying with several people

If you are planning to buy your investment property in partnership with others, a company structure makes ownership and profit-sharing easier. Each person can hold shares that represent their stake in the property, and changes in ownership are as simple as transferring shares. This can be useful for families, friends or business partners who want clear rules and a straightforward governance structure.

However, a company structure can introduce extra complexity. Shareholders need to agree on how decisions will be made, how money will be contributed and how profits will be distributed. These rules must be documented, and disagreements can become harder to resolve if people’s circumstances change. 

When buying an investment property in a company may not suit you

The advantages of a company structure need to be weighed against the limitations. These limitations can affect the cost, flexibility and performance of your investment, so it is worth considering them early.

Higher compliance and running costs

Companies must lodge annual financial statements and tax returns. This typically means paying for accounting support each year. There are also fees payable to the financial services regulator, ASIC, and bookkeeping tasks that do not apply when you hold a property in your own name. For busy Melbourne professionals, outsourcing these tasks is often necessary, which adds cost.

Capital gains tax options

Disclaimer: This section contains general information about tax. Consult a qualified tax professional before making decisions.

When a property is owned by an individual and held for more than 12 months, they can access a capital gains tax discount of 50%. Companies, however, do not receive this reduction and the entire capital gain is taxed at the company tax rate. There are some exceptions for small businesses, but strict eligibility criteria apply. 

Fewer lender options and different lending criteria

Not all lenders offer home and investment loans to companies. Some restrict loan-to-value ratios or may charge slightly higher interest rates. Others require extensive documentation, which increases processing time. These limitations can reduce choice and may affect your borrowing power.

Cash flow restrictions

With a company, money cannot be taken out freely. Payments to shareholders must be managed as wages, dividends or loan repayments, each with its own tax implications. For investors who want flexible access to rental income or sale proceeds, this lack of simplicity can be a drawback.

The verdict

Deciding whether to use a company structure for an investment property really depends on your individual circumstances, finances and long-term goals. Some factors that investors often consider include:

• Your overall income and how the property’s cash flow aligns with your broader tax position

• Whether asset protection is an important consideration, given your profession or existing wealth

• Plans to build a larger property portfolio over time

• Purchasing with other people and wanting a clear ownership and governance structure

There is no one-size-fits-all answer. For some investors, a company structure may offer benefits in certain situations, while for others, owning the property personally might be simpler or more suitable.

It’s important to discuss your options with a qualified accountant and an experienced mortgage broker, who can help you understand how different structures could impact your tax, lending and cash flow, based on your personal situation.

Working with a mortgage broker

Choosing the right borrowing structure is one of the most important decisions you will make as an investor. As a mortgage broker that Melbourne buyers trust, AXTON Finance can map out lender policies, run the numbers and coordinate with your accountant to ensure the loan structure supports your broader goals. Our team can also streamline the process for time-poor professionals who want clear advice without the jargon.

Need clear, efficient advice on the most suitable way to structure your next investment purchase? AXTON Finance can help you compare lenders, understand policies and choose the right path. Call 03 9939 7576, email getabetterrate@axtonfinance.com.au or get in touch today.