The question used to have a reasonably simple answer. Now Budget 2026 has changed the calculus entirely. The structure you choose for your next investment property will determine not just how much tax you pay — but whether you can claim negative gearing losses at all, how your CGT is calculated at sale, and how protected you are if the tax rules change again.
This article explains the four main structures, the tax treatment of each under the new rules, and how to model which one is best for your situation.
The Four Structures
1. Personal Name
Buying property in your own name (or joint names) is the simplest structure. All rental income is assessed at your marginal rate. Losses from negative gearing are offset against your wages — this is where Budget 2026 bites hardest.
Under Budget 2026:
- Established property purchased after 12 May 2026: losses can no longer be deducted against wages from 1 July 2027
- Losses carry forward to offset future income from the same property or reduce CGT at sale
- New builds in personal name: unchanged — full negative gearing retained
- CGT: 30% flat on inflation-adjusted real gain (from 1 July 2027 for new property)
- Grandfathered: all properties purchased before 12 May 2026
Best for: New builds. High-income earners with strong existing portfolios buying new builds. Investors who plan short hold periods where losses are minimal.
2. Company Structure
A company (Pty Ltd) pays a flat 30% corporate tax rate on net profit. There is no CGT discount — a company pays 30% tax on the full capital gain. This makes companies poor vehicles for long-term property holding where capital growth is the primary return.
Under Budget 2026:
- Companies are exempt from the new negative gearing restrictions — the loss quarantine applies to individuals, not companies
- The 30% corporate rate applies to losses in the same way as income
- Franking credits flow through dividends to shareholders — partially offsetting the double-tax concern
- CGT: no discount. Full gain taxed at 30%. No inflation adjustment.
When companies work: Primarily for short-term buy-renovate-sell plays where the tax-free CGT discount is irrelevant, and where distributing profits to shareholders generates franking credit value.
Companies generally don't work for long-term capital growth plays. The absence of the CGT discount is a significant disadvantage over a 10-year hold.
3. Discretionary Trust
A family trust (discretionary trust) does not pay tax itself — it distributes income to beneficiaries who pay at their own marginal rates. The trustee can distribute income flexibly each year to whoever has the lowest taxable income in the family.
This distribution flexibility is the main advantage. A family with mixed incomes can direct rental profit to the lowest-earning family member and reduce the overall tax bill significantly.
Under Budget 2026:
- Trusts are subject to the negative gearing restrictions (the loss quarantine applies to trust distributions)
- Importantly: losses cannot be distributed out of a trust under existing trust tax law — trust losses are trapped inside the trust and cannot be passed to beneficiaries
- This has always been true. What changed is that this limitation now applies universally — there is no longer a route to claiming losses via a trust through negative gearing
- For positively geared properties, trusts remain excellent — distribute profit to low-income beneficiaries
- CGT: trust beneficiaries access the 50% CGT discount (if individual), which is favourable
Best for: Positively geared properties. Properties expected to become positively geared within 3–5 years. Families with income-splitting opportunities.
4. SMSF (Self-Managed Super Fund)
An SMSF in accumulation phase pays 15% tax on income and 10% on capital gains (after 12-month hold). In pension phase, all income and gains are effectively tax-free. This is the most tax-efficient structure for long-term property holding.
Under Budget 2026:
- SMSFs are fully exempt from the new negative gearing restrictions
- The concessional super tax rates continue to apply
- The $3 million balance cap (unrealised gains tax) introduced in the 2025 budget affects very large balances — but for typical property investments, the SMSF remains highly tax efficient
- SMSF borrowing (LRBA — limited recourse borrowing arrangement) continues to be available for property purchases
Best for: Long-term buy-and-hold strategies. Properties expected to generate strong capital growth. Investors close to or in retirement. Any investor with sufficient super balance to fund the purchase without LMI.
How Budget 2026 Changed the Comparison
Before Budget 2026, the choice between structures was primarily about income level, family structure, and hold period. The negative gearing tax benefit was available across all structures (with trust nuances).
Now there is a new axis: whether the structure is exempt from the negative gearing restriction.
| Structure | Neg gearing on established (new purchases) | CGT treatment | |---|---|---| | Personal name | Quarantined (losses carry forward) | 30% flat on real gain | | Company | Exempt (30% corporate rate applies) | No discount — 30% on full gain | | Trust | Losses trapped (always were) | 50% discount for individual beneficiaries | | SMSF | Exempt (15% accumulation rate) | 10% on gain (accumulation) / 0% (pension) |
The SMSF emerges as the clear winner for established property under the new rules — both because it's exempt from the restriction AND because the tax rates are significantly lower.
For new builds, all structures retain full negative gearing, so the comparison returns to the traditional factors.
Worked Example: $750,000 Established Property
Assumptions: $750,000 property, 20% deposit, 6.5% interest rate, $650/wk rent, $12,000 annual expenses, $125,000 investor income.
Personal Name (restricted — new purchase)
- Pre-tax loss: −$18,200/yr
- Under new rules: loss quarantined, no immediate tax benefit
- Weekly cashflow: −$350/wk (no offset)
- Carried forward loss reduces CGT at sale
Company
- Pre-tax loss: −$18,200/yr
- Corporate tax treatment: loss offsets future income at 30%
- Effective weekly cashflow: −$254/wk (30% tax shield on loss)
SMSF (accumulation)
- Pre-tax loss: −$18,200/yr
- SMSF tax: loss offsets income at 15%
- Effective weekly cashflow: −$306/wk (15% benefit)
- But: long-term CGT rate of 10% is far lower than personal rate
Trust (positively geared scenario, 3 years in)
- Distributes $8,000 profit to beneficiary on $30,000 income
- Tax on distribution: $1,520 vs $2,960 if held personally
- Annual saving: $1,440
The right structure depends on: current cash position, tax rate, hold period, and whether the property is new or established.
Using PropTime's Structure Optimiser
PropTime's Structure Optimiser runs all four structures simultaneously with your actual numbers. It shows:
- Year-by-year cashflow for each structure
- Cumulative wealth position after CGT and selling costs
- Which structure wins at your specific hold period
- Budget 2026 impact — which structures are exempt vs restricted
The tool accounts for all variables: state, property type, loan structure, marginal rate, SMSF phase, trust beneficiary incomes, and the full range of depreciation scenarios.
Summary: Which Structure in 2026?
Buying established property (new purchase): SMSF > Company > Personal (restricted) = Trust (losses trapped). Unless you're building wealth specifically via super, run the numbers on company vs SMSF based on your CGT expectations.
Buying a new build: Personal name for simplicity. Trust if you have income-splitting opportunities. SMSF if long-term super wealth is the goal.
Existing portfolio: Review your structure at renewal — grandfathered properties are protected, but don't assume all future purchases should follow the same structure.
Educational analysis only — not financial or tax advice. Consult a qualified tax adviser before making structural decisions.