Understanding the Basics of Company Structure Investment Loans

Most property investors borrow in their personal name, but some choose to hold the loan through a company.

That structure changes how lenders assess the application, which loan products become available, and how you manage tax and liability down the track. It does not automatically reduce your borrowing costs or increase your deposit requirements, though both can shift depending on the company type and how long it has been trading.

When a Company Structure Makes Sense

A company structure can offer asset protection and flexibility when holding multiple properties or managing investment property alongside other business interests. If an investor owns three properties through a company and one tenant takes legal action, the claim sits with the company rather than the individual directors. That separation does not protect against personal guarantees, which nearly all lenders require for residential investment loans regardless of the borrowing entity.

Consider an investor who runs a local trades business in Ocean Grove and wants to buy a two-bedroom unit near The Terrace as a rental property. Borrowing through their existing trading company means rental income and expenses flow through the same entity as their business income, which can simplify accounting and make year-end tax reporting more consolidated. The trade-off is that the loan becomes a commercial product with different eligibility criteria and sometimes a slightly higher interest rate than a standard residential investor loan.

How Lenders Assess a Company Borrower

Lenders assess a company borrower by reviewing the company's financial position, its trading history, and the personal financial position of the directors who guarantee the loan. A company that has been trading for two or more years with audited or reviewed financial statements will usually qualify for standard residential investor loan products. A newly registered company, or one set up solely to hold property, may only access commercial loan products, which typically require a higher deposit and involve a different credit assessment process.

The serviceability test applies to the company's ability to cover loan repayments from rental income and other revenue, but lenders also assess the directors' capacity to meet obligations under the personal guarantee. Most lenders apply a 3 percentage point buffer above the loan interest rate when calculating whether the company can service the debt, the same buffer used for personal borrowers. The difference is that lenders look at company profit and loss statements rather than individual payslips.

What Changes Between Residential and Commercial Investment Products

A residential investment loan taken through an established company can access the same variable and fixed rate products available to personal borrowers, provided the company meets lender criteria. A commercial loan for a company borrower usually involves a higher interest rate, a maximum loan term of 15 to 20 years instead of 30, and principal-and-interest repayments rather than interest-only options.

The deposit requirement does not automatically increase when borrowing through a company, but it depends on the company type and trading history. A discretionary trust with a corporate trustee buying a property in Ocean Grove near Kingston Park can borrow up to 90 per cent of the property value with some lenders if the trust has sufficient income and the directors have strong personal financial positions. A newly registered shelf company with no trading history may need a 30 to 40 per cent deposit and will likely face commercial loan terms.

Tax Treatment for Company-Owned Investment Property

Income earned by a company is taxed at the flat company tax rate of 25 per cent for base rate entities or 30 per cent otherwise, rather than at the individual marginal tax rate. That can benefit high-income earners but removes access to the 50 per cent capital gains discount available to individuals. When the company sells the property, the entire capital gain is taxed at the company rate without any discount, though the cost base can be indexed for inflation on gains accruing from 1 July 2027 under current legislation.

Interest on the loan and other holding costs remain deductible against the company's assessable income, subject to the negative gearing rules that apply from the 2027-28 income year for established properties acquired after 12 May 2026. For properties acquired before that date, losses continue to be deductible against all company income. Franking credits generated by the company paying tax can be distributed to shareholders when dividends are paid, which can reduce the overall tax burden depending on each shareholder's marginal rate.

Lending Structures That Work for Company Borrowers in Ocean Grove

An investor borrowing through a company to buy a property near the foreshore or around the Collendina area should confirm with their lender whether the loan will be assessed as residential or commercial before proceeding. Some lenders treat all company borrowing as commercial, while others will extend residential investor products to companies that meet specific criteria, including a minimum of two years trading history, a clear link between the property and the company's activities, and strong director financials.

The loan application requires company tax returns, financial statements, an ASIC company extract, and personal financial information for all guarantors. Settlement times are usually the same as for personal borrowers, though some lenders require additional legal review when the borrowing entity is a company or trust. If the company holds other mortgaged properties, those will be factored into the serviceability calculation, which can reduce how much the company can borrow for the new property.

Refinancing and Switching Between Structures

Moving a property from personal ownership into a company, or the reverse, triggers a change of ownership and usually involves stamp duty and capital gains tax. Refinancing the loan without changing ownership does not trigger those costs. A company borrower looking to refinance an existing investment loan can shop across lenders in the same way an individual borrower would, though the range of available products may be narrower depending on the company's structure and the loan amount.

If an investor initially borrowed through a company and later wants to access residential loan features such as offset accounts or longer interest-only periods, moving the loan to a lender that offers residential products to company borrowers can open up those options without needing to transfer the property title. Not all lenders offer this, so checking product eligibility early in the investment loan application process avoids surprises at settlement.

Call one of our team or book an appointment at a time that works for you. We work with lenders across Australia who offer residential and commercial loan products to company borrowers, and we can walk through how your structure affects your borrowing options and tax position before you commit to a purchase.

Frequently Asked Questions