Tax Planning
Structuring Investment Property Ownership: Entity Choices amidst Proposed Tax Reforms
With proposed new rules around minimum CGT rates and company tax, choosing between personal, trust or company ownership is more important than ever.
By NomadicTax Research Team • 5-8 min read • June 14, 2026
## Introduction
Australia is considering major tax reforms that will affect how investment properties are taxed. Key proposals include a **minimum 30% tax rate on real capital gains accruing from 1 July 2027** and changes to company taxation and trust income provisions as proposed in the 2026-27 Budget. If you’re acquiring or restructuring property investments, entity choice (individual, trust, or company) has become even more critical. ([community.ato.gov.au](https://community.ato.gov.au/s/question/a0JMo0000057pEH/p-00420353?utm_source=openai))
## Key Proposed Changes Around Investment Property Taxation
- **Minimum 30% tax on real capital gains** for gains accrued from **1 July 2027**. Assets held before that date will remain taxed under current arrangements for the portion of gains accrued before that date. ([community.ato.gov.au](https://community.ato.gov.au/s/question/a0JMo0000057pEH/p-00420353?utm_source=openai))
- **Discount rate and CGT exemptions** may be phased down or altered — reducing benefits of the 50% discount that applies to individuals/trusts for assets held over 1 year.
- Additional proposals around **foreign resident capital gains tax (Div 855)**: broadening asset types subject, point-in-time principal asset tests, and requiring notifications to ATO for large share sales. These apply from **1 July 2025** for CGT events. ([ato.gov.au](https://www.ato.gov.au/api/public/content/0-b12d922f-3ffe-47a6-a868-289919bcf50a?utm_source=openai))
## Pros & Cons: Entity Types in the Context of New Rules
| Entity | Advantages | Disadvantages under Proposed/Reform Environment |
|---|---|---|
| **Individual owner** | Access to CGT discount (currently 50%) in existing law; simpler structure; personal tax rates for low-income situations | Minimum 30% tax reduces discount effect for large gains; lower ability to shift income; less flexibility for trusts on distribution |
| **Discretionary Trusts** | Ability to distribute income to beneficiaries; flexibility in tax outcomes | Trust distributions taxed at beneficiary rates; high or flat minimum CGT may reduce benefits; stricter reporting/compliance (e.g. beneficiary TFN reporting from 1 July 2026) ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/MTAS220260121?utm_source=openai)) |
| **Company** | Flat base rate (e.g. 25–30%) for business income; limited liability; suitable for scaling or investment entities | Passive rental income often excluded from base-rate entity classification; company taxation may be less advantageous for small holders; less CGT discount; retention of tax until profits distributed |
## Practical Structuring Tips & Re-structuring Considerations
- If you already own property outright, consider holding off on selling until after **1 July 2027**, but seek advice since timing of gain accrual matters.
- For new purchases, doing so in a company structure may lock in a known flat tax base rather than being exposed to potentially higher marginal rates under minimum tax regimes.
- Before moving assets between personal/trust/company ownership, check whether proposed “rollover relief” legislation will be passed — this may allow restructuring without CGT/stamp duty, though it’s not yet legislated.
- Ensure trusts are compliant with upcoming **mandatory beneficiary TFN reporting** for closely held trusts from **1 July 2026**, to avoid penalties and surprise tax events. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/MTAS220260121?utm_source=openai))
## Example Scenarios
- **Scenario A**: Alice buys a rental property personally in 2026 expecting minimal capital gains in interim; keeps it until 2030. Under proposed rules, gain accrued after 1 July 2027 will be taxed at **minimum 30%**, rather than at her marginal rate which could be higher or lower depending—but the discount may be restricted.
- **Scenario B**: A family trust owning multiple rental properties distributes income among beneficiaries to utilize lower marginal rates; after reforms this benefit may narrow, making company ownership more comfortable for passive income.
## Action Plan
1. **Model your expected gains** for each structure over several scenarios: before/after July 2027, personal vs trust vs company.
2. **Seek pre-legislative clarity**: watch for final forms of law concerning rollovers, company passive income, and foreign resident CGT rules.
3. **Get professional advice** with international/tax-change awareness.
4. **Document entity decisions** carefully, especially when purchasing under certain entity to avoid surprises later.
## Conclusion
With minimum tax proposals and revised CGT/foreign investor rules moving forward, structuring investment property ownership is no longer simply optional—it’s essential. Taking time now to plan and adapt could yield substantial tax savings and reduce risk downstream.