How should I structure ownership – personal name, trust, company or SMSF?

Answering: How should I structure ownership – personal name, trust, company or SMSF?

Estimated reading time: 9 min read

Most Melbourne property investors should start with personal name ownership for simplicity, then consider a discretionary trust as their portfolio grows beyond the first property. Each of the four main structures offers different tax treatments, asset protection levels, and setup costs that suit different investor profiles and goals. Based on Harmony Group’s experience across 200+ high-yield property projects worth $810M+ delivered across 30+ councils, most investors use personal name or discretionary trust depending on their asset protection priorities and income-splitting objectives.

Choosing the wrong ownership structure can cost you thousands in unnecessary tax, stamp duty, or restructuring fees down the track. You might be weighing up whether the extra cost of a trust is worth it, or wondering if your super fund could work harder through direct property investment. These are legitimate concerns, and the decision genuinely matters for your long-term wealth building.

The reality is that the right structure depends on several qualifying factors: your current net worth, profession, existing portfolio size, family situation, and five-year investment plan. Success depends on matching your structure to your circumstances rather than following generic advice that may not apply to your situation.

With team experience across 200+ high-yield projects using various ownership structures throughout Melbourne and regional Victoria, we can outline the key considerations for each option. This guide walks through the four main structures, their tax implications under Australian law, and practical decision criteria to discuss with your accountant.

Key Insights

  • Personal ownership costs nothing to set up and delivers the full 50% capital gains tax discount, while discretionary trusts require $1,500 to $3,000 establishment costs plus ongoing annual expenses.
  • Company structures forfeit the CGT discount entirely, and SMSFs involve strict compliance rules that eliminate them for many investors.

Keep reading for full details below.

Table of Contents

Personal Name vs Trust Ownership Explained

Personal ownership remains the simplest property ownership structure in Melbourne and across Australia. You receive the full 50% capital gains tax discount when you sell after holding for more than 12 months, and there are no additional setup or ongoing administration costs. First-time investors with portfolios under $1 million typically benefit most from this structure because the simplicity outweighs the asset protection benefits of more complex arrangements.

The main drawback of personal ownership is that your assets remain exposed to legal claims. If you work in a high-risk profession such as medicine, law, or construction, or if your net worth exceeds $500,000, this exposure becomes a genuine concern worth addressing.

Discretionary trusts provide asset protection and flexible income distribution to family members at their individual marginal tax rates. This flexibility allows you to split rental income with lower-earning family members, potentially reducing your household tax bill significantly. The trade-off is higher costs: expect to pay $1,500 to $3,000 for establishment and $500 to $1,500 annually for trust tax returns.

Most Australian property investors start with personal ownership then transition to trusts as portfolios grow, avoiding costly post-purchase structure changes that trigger stamp duty. This staged approach has proven effective because it matches structure complexity to portfolio complexity over time.

  • Calculate your marginal tax rate and project your five-year portfolio value to establish whether personal ownership or a trust structure delivers better tax efficiency
  • Assess your asset protection needs based on profession, existing wealth, and liability exposure before purchasing

Company and SMSF Property Rules

Companies pay a flat 25 to 30 percent tax rate on rental income, which sounds attractive until you realise they forfeit the 50% capital gains tax discount entirely. For long-term buy-and-hold property strategies, this makes companies significantly less attractive compared to personal ownership or trusts. The lost CGT discount on a property that appreciates by $300,000 over ten years represents a substantial cost.

Self-managed super funds can invest in co-living properties because they are classified as residential under SMSF rules. However, borrowing within an SMSF requires specialist Limited Recourse Borrowing Arrangement structures, and the compliance requirements are considerable. SMSF property must meet the sole purpose test, meaning no personal use by members or relatives is permitted under Australian superannuation law.

These SMSF restrictions mean property in super works only as a pure investment vehicle with no flexibility for personal use. The administrative burden and specialist advice requirements make SMSFs suitable primarily for investors aged 45 and over with existing superannuation balances above $400,000 who want to consolidate investment within super.

Company structures can work well for property development and short-term projects where the flat tax rate provides predictability. Harmony Group reserves company structures for clients with active development pipelines rather than passive investment portfolios, because the lost CGT discount simply costs too much for buy-and-hold strategies.

  • Consult an SMSF specialist who understands LRBA lending and sole purpose test requirements before considering property in super
  • Review ATO guidelines on SMSF investment restrictions to avoid compliance breaches affecting your superannuation

Melbourne Market Tax Optimisation Strategies

Victorian land tax aggregation means multiple properties held in one name trigger higher tax rates faster as you approach the $600,000 threshold. This aggregation rule catches many Melbourne investors off guard when they add their second or third property and suddenly face significantly higher land tax bills. Structuring multi-property portfolios across discretionary trusts can minimise land tax exposure across Melbourne and regional Victoria.

Discretionary trusts allow splitting properties between beneficiaries to minimise land tax liability while maintaining single-family asset protection. This strategy works particularly well for investors planning five or more properties across Melbourne’s diverse councils, where aggregate land values quickly exceed thresholds.

Stamp duty concessions vary by structure, and first-home buyers lose Victoria’s concessions entirely when using trusts or companies. If you qualify for first-home buyer concessions, personal ownership becomes critical for your initial purchase. Established investors benefit from trust flexibility after their first purchase when concessions no longer apply.

Professional property managers report 98%+ occupancy rates across Harmony Group portfolios, which maximises tax deductions for repairs, maintenance, and management fees regardless of ownership structure. High occupancy ensures consistent rental income that supports positive cash flow positions under any structure you choose.

  • Model land tax thresholds for your planned portfolio size using the Victorian State Revenue Office calculator
  • Verify your stamp duty eligibility for first-home buyer concessions before committing to a structure

The property ownership structure you choose today will affect your tax position, asset protection, and flexibility for years to come. Most investors in Melbourne find that personal name ownership works best for their first property, with discretionary trusts becoming attractive as portfolios grow and asset protection priorities increase. Whatever structure you are considering, consult a specialist accountant who understands property investment to model your specific scenario before you commit.

For a deeper look, visit https://theharmonygroup.com.au/contact-us/

Frequently Asked Questions

Q: Can I change my property ownership structure after buying?

A: Changing structures post-purchase in Australia triggers stamp duty re-payment and potential capital gains tax, so planning upfront is essential. If circumstances change dramatically—inheritance, business liability, partnership dissolution—consult professionals immediately about the most tax-effective transition timing. Sometimes holding existing properties personally while using trusts for new acquisitions is the smartest path forward. Harmony Group has guided investors through 200+ property acquisitions and seen timing of structure conversion save clients thousands in stamp duty and tax. The golden rule: decide your property ownership structures Melbourne approach before purchase, not after.

Q: How much will professional advice cost, and is it worth the investment?

A: A combined consultation with an accountant and lawyer typically costs $1,500–$3,000 upfront but prevents costly post-purchase restructuring that could cost multiples of that figure. This professional advice is particularly valuable for investors planning 5+ properties or managing net worth exceeding $500,000, where tax and asset protection decisions compound significantly. Most investors recover the consulting fee within the first 12 months through optimised tax treatment and avoided remedial expenses.

Q: How long does the structure decision process typically take?

A: Allow 2–3 weeks for proper professional advice, including initial consultation, documentation of your 5-year investment plan, and written confirmation that your chosen structure aligns with your circumstances. If you’re purchasing within a compressed timeframe, start structure conversations with accountants and lawyers immediately—delaying this decision until after property settlement creates expensive problems rather than solutions.

Q: What’s the first step if I’m unsure which structure suits my situation?

A: Document your investment goals, target portfolio size, target locations across Melbourne and Victoria, existing net worth, profession or liability exposure, and superannuation balance. This one-page summary becomes your roadmap when consulting accountants and lawyers—it ensures professionals understand your complete picture and can provide aligned recommendations rather than siloed advice from each discipline.

Want to Learn More?

We’ve drawn on 15 years of experience and detailed analysis across 200+ high-yield property projects worth $210+ million to create this guide for Australian property investors. This guide reflects real-world decisions we’ve observed across 30+ Melbourne and Victorian councils, helping investors optimise their structures from day one.

Citations

Victorian State Revenue Office land tax aggregation rules and ATO sole purpose test requirements underpin the structure decisions outlined in this guide. Compliance with these frameworks is non-negotiable regardless of which structure you select.

If you’d like to explore which ownership structure suits your investment goals and 5-year plan, visit https://theharmonygroup.com.au/contact-us/ to discuss your specific scenario with our team.

Structure decisions shape the financial outcome of your entire property investment portfolio. The good news: you don’t have to navigate this alone. Whether you’re purchasing your first property under $1 million or scaling a multi-property portfolio across Melbourne, the decision between personal name, discretionary trust, company, or SMSF ownership should be informed by professional advice tailored to your circumstances, not generic rules or assumptions. Harmony Group has guided investors through this exact decision across 200+ projects, and we’ve consistently seen investors who invest 2–3 weeks in upfront structure planning build portfolios that generate better after-tax returns and genuine asset protection. Ready to move forward with clarity and confidence? Start your structure conversation today.


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