Should You Buy Property in a Trust?

Buying property through a trust is a strategy that’s gained traction among investors and families alike — often for reasons like tax planning, asset protection, or long-term wealth building. But before you go signing contracts, it’s important to understand how trusts work and whether they’re the right fit for your goals.

What Does It Mean to Buy Property in a Trust?

When you buy property in a trust, the trust becomes the legal owner, not you personally. This means all rights and responsibilities associated with the property fall under the trust structure.

There are different types of trusts used for property ownership:

• Family Trusts (Discretionary Trusts) – Often used for flexible income distribution among family members.
• Unit Trusts – Suitable when multiple parties are involved, such as business partners.
• Hybrid Trusts – A combination of discretionary and unit trusts, often used for more complex strategies.

How It Works

Setting up a trust structure to purchase property involves several key steps and considerations:

• Establish the trust – A legal document called a trust deed sets the rules and appoints a trustee.
• The trustee signs the contract – This can be an individual or a company, acting on behalf of the trust.
• Financing can be more complex – Lenders often treat trust loans with more caution. Expect stricter requirements and sometimes higher interest rates.
• Income and expenses are handled through the trust – All rental income, property expenses, and capital gains flow through the trust.
• Be prepared for tax and duty implications – Land tax and stamp duty can vary significantly between states, especially with discretionary trusts.

Who Might Benefit from This Strategy?

Buying property in a trust is generally suited for:

• Investors looking to protect personal assets from potential legal or financial risks
• Families wanting flexible tax planning and income distribution options
• High-net-worth individuals building generational wealth and succession plans

When This Strategy May Not Be Right

There are some scenarios where buying property in a trust may not be suitable:

• First-home buyers seeking grants or concessions — Trusts typically don’t qualify.
• Those needing to maximise their borrowing power — Banks often lend less to trusts.
• Anyone who wants a simple ownership structure — Trusts involve more admin, compliance, and costs.

View the Full Breakdown

If you’re weighing up the pros and cons of buying property through a trust, don’t guess your way through it. We’ve put together a full breakdown in video format to help you better understand how it works and what to consider.