Australian residential property can be owned through six broad structures: personal ownership, joint personal ownership, a discretionary (family) trust, a company, an SMSF in accumulation phase, and an SMSF in pension phase. Each has a different tax treatment of rent, capital gains, and (under the proposed 2027 reform) negative-gearing losses. None is universally “best” - the structure that wins on tax often loses on flexibility, and the one that wins on flexibility often loses on tax efficiency. This post lays out what each structure actually does, with the proposed 2027 reform applied.
The six structures in plain English
Personal ownership
One owner pays tax on rent and the capital gain at their marginal income-tax rate. Long-term gains (held more than 12 months) get the 50% CGT discount under current law (s 115-100 ITAA 1997). Negative-gearing losses can offset salary today, but the proposed 2027 restriction stops this for established residential property. Simple to set up, simple to wind up. Loses flexibility because there’s only one owner’s marginal rate to work with.
Joint personal ownership
Tax is split between owners by ownership percentages. Each owner pays their own marginal rate on their share of rent and the capital gain. Both owners get the 50% CGT discount on long-term gains. Genuinely useful when one owner is on a much lower marginal rate - e.g. one partner working, one not. Loses flexibility because the split is fixed by title and can’t be re-streamed year to year.
Discretionary trust
The trustee can stream rent and capital gains to whichever beneficiary is on the lowest marginal rate that year. Powerful flexibility, especially when family income varies year to year (parental leave, study, retirement).
The proposed 30% trust minimum tax from 1 July 2028 caps that advantage: the trust group pays whichever is higher - beneficiary tax or 30% of net trust income. There is a restructure-relief window (July 2027 to June 2030) that lets trusts convert without the floor biting. Trust losses cannot be distributed; they carry forward inside the trust.
Company
A company holds the property and pays company tax (25% for base rate entities) on rent and the gain. Companies do not get the 50% CGT discount, so the full gain is taxed inside the company. At disposal, the after-tax profit can be paid out as a fully franked dividend; the shareholder pays the gap between company tax and their marginal rate.
High-income owners typically end up worse off than personal ownership for residential property because of the lost discount. Companies have a role in property - commercial holdings, development entities - but for a simple residential rental they rarely win on the headline numbers.
SMSF accumulation
An SMSF holds the property in accumulation phase. Earnings are taxed at 15% and long-term gains effectively at 10% (the 1/3 discount under s 115-100(b)). The proposed Division 296 from 2026-27 adds an extra 15% on the portion of earnings attributable to a Total Super Balance above $3M.
Property inside an SMSF brings constraints the headline equity number doesn’t capture: limited recourse borrowing rules, sole-purpose test, annual audit, restricted ability to add or remove the property. Setup and ongoing compliance run ~$3,000/year for a typical SMSF.
SMSF pension
An SMSF holds the property in pension phase. Eligible income and capital gains are taxed at 0%. Members must have met a condition of release and the fund must be paying minimum pensions. Div 296 still applies on the >$3M portion.
The headline 0% rate is attractive but the compliance + access constraints are real: capital is locked until release, transfer balance caps apply, minimum pension drawdown is required. SMSF pension typically only suits members already in retirement phase.
What the proposed 2027 reform changes per structure
Three measures from the 2025 Budget hit different structures differently:
- Negative-gearing restriction on established residential property from 1 July 2027. Quarantines net losses so they can’t offset salary. Bites personaland joint personal ownership hardest, because those are the structures most likely to use the offset against high-rate salary income. Trusts, companies and SMSFs already carry losses internally, so the restriction is largely a no-op for them.
- CGT split at 1 July 2027 with a 30% minimum tax floor on the post-reform portion of the gain. Bites every structure that pays CGT - personal, joint personal, trust (when streamed), company, SMSF accumulation. SMSF pension is untouched because its CGT rate is 0%.
- Trust 30% minimum tax from 1 July 2028 on retained net income. Bites discretionary trusts specifically, eroding the streaming advantage to low-rate beneficiaries.
A worked comparison
Same property, same loan, same assumptions - run through all six structures. The Byrz sample report (~$1.6M Sydney established residential, $1.2M IO loan at 6.5%, 6-year hold to 2032, joint personal current ownership) produces this side-by-side on after-tax equity at sale, under the proposed reform:
| Structure | After-tax equity | vs current (joint) |
|---|---|---|
| Joint personal ownership (current) | $702,547 | · baseline |
| Personal ownership | $692,083 | −$10,464 |
| SMSF pension | $739,032 | +$36,485 |
| SMSF accumulation | $710,059 | +$7,512 |
| Discretionary trust | $628,193 | −$74,354 |
| Company | $394,867 | −$307,680 |
SMSF pension wins on the headline. But the comparison before the structure change cost is misleading. Moving an existing property into an SMSF or trust triggers stamp duty, crystallises CGT on the way out, and adds setup and refinance costs. With those costs in:
| Structure | Structure change cost | Net equity (after cost) | vs staying put |
|---|---|---|---|
| Joint personal (stay put) | $0 | $702,547 | · baseline |
| Personal ownership | $75,000 | $617,083 | −$85,464 |
| SMSF pension | $220,000 | $519,032 | −$183,515 |
| SMSF accumulation | $215,000 | $495,059 | −$207,488 |
| Discretionary trust | $153,000 | $475,193 | −$227,354 |
| Company | $151,000 | $243,867 | −$458,680 |
For this property, this owner, this hold period - staying put wins once you net the cost of moving. That’s common but not universal. The right answer depends on the property value, the hold period (longer holds amortise move-in cost better), the current vs target marginal rate, and whether income can be re-streamed inside a trust or SMSF.
How to pick
A practical framing:
- If you’re buying new: the structure decision is cheap (no crystallisation cost), so do the analysis properly. SMSF pension often wins on tax for retirees with spare cap room; personal or joint personal wins for working-age investors who need the equity to be accessible.
- If you already own: moving the property is usually expensive. Calculate the structure change cost first; if the tax saving over your remaining hold doesn’t exceed that cost, stay put.
- If you’re in a discretionary trust: watch the 2028 minimum-tax floor. The current streaming advantage may shrink. The restructure-relief window (Jul 2027–Jun 2030) is there for that reason.
- If you’re considering SMSF: model the access constraints, not just the headline rate. Capital is locked until release. For a 35-year-old that’s ~25 years of illiquidity on the property equity.
Caveats
Several measures discussed here are proposals - the trust minimum tax (1 July 2028), the CGT split (1 July 2027), Div 296 (2026-27), and the negative-gearing restriction (1 July 2027). Final legislation, regulations and ATO guidance may change the scope or timing of any of them.
The comparison above is a worked example from one sample property with specific inputs. Your numbers will differ on marginal rate, beneficiary mix, depreciation profile, loan terms and hold horizon. Treat it as scenario planning, not advice.
To see this analysis on your own property - including the structure change cost trade-off, the per-structure risk profile, and the warnings specific to each - see the Byrz sample report for the full output, or start a property report against your own inputs.