Owning Your Home as a Business Owner: Personal vs Trust vs Company

As a business owner, it’s natural to ask whether you should buy your home in a company or trust for asset protection and flexibility. In Australia, for most small and mid‑sized business owners, owning your principal place of residence (PPOR) personally is usually more tax‑effective, cheaper on land tax and simpler for lending than buying it in an entity. Trust or company ownership can help in narrow, high‑wealth situations, but often backfires when you look at tax, borrowing power and personal guarantees.

This guide steps through the tax rules, lending realities, asset protection myths and worked scenarios so you can make a decision you’re comfortable acting on this week.

Choosing between personal, trust and company ownership changes tax, lending and risk profiles.

1. The decision in a nutshell

1.1 The short answer

For 90% of Australian business owners, the starting point is:

• Buy your home in personal names (often weighted towards the lower‑risk spouse), not in your trading company.
• Only consider a family trust with a corporate trustee where you already have significant wealth, low debt, and clear legal, estate‑planning or asset‑protection goals backed by advice.

That’s because:

1. You usually lose the main residence CGT exemption if a company or trust owns the home.
2. Land tax is typically higher and kicks in earlier for trusts and companies than for individuals.
3. Lenders almost always require personal guarantees on entity loans, which substantially weakens the asset protection you were trying to create.
4. Borrowing is harder and sometimes more expensive through an entity, with fewer lenders and tighter policies.

1.2 Where a company or trust might make sense

A company or trust might be worth exploring where:

• Your net wealth is already high, and the home will be lowly geared (e.g. ≤40–50% loan‑to‑value ratio).
• You work in a high‑litigation profession or industry and already have business and professional indemnity risks tightly managed.
• You have complex family or estate planning needs (e.g. blended family, vulnerable children, succession for a family business).
• You’ve already maxed out simpler protections (e.g. non‑risk spouse ownership, insurance) and still need more.

Even then, you’ll almost always want a coordinated plan between your broker, tax adviser and lawyer, not just a structure set up in isolation.

For a related deep dive focused on high‑value properties, see “Should Your High‑End Home Sit in a Family Trust?”.

2. How lenders see your home when an entity owns it

From a lender’s perspective, a home owned by your company or trust is a commercial‑style loan secured by residential property. That shift alone changes a lot.

2.1 Typical lending differences

All figures are indicative only; policies vary by lender and change over time.

Two key points:

1. Personal guarantees pull risk back to you. In practice, most mainstream lenders treat loans to your company or trust with a personal guarantee as if they’re your personal liabilities when testing serviceability. That means your capacity for other loans (including future investments) is reduced.
2. Entity structures narrow your lender pool. Fewer lenders are keen on small entity‑owned homes, so you lose competition, flexibility and sometimes pay a higher margin.

2.2 Serviceability and the APRA buffer

APRA expects banks to test your borrowing capacity with a serviceability buffer of at least 3% above the actual rate. If your home is in an entity, the lender will usually:

• Assess your personal income and living costs, plus
• Look through to the entity’s income, debts and cashflow, and
• Add the new loan (and any other entity loans you’ve guaranteed) into the serviceability test with the buffer.

The result: if your trading company already has equipment finance, overdrafts or leases with personal guarantees, those commitments will often be treated as personal debts, which can materially cut your borrowing power.

If you’re still working towards bank‑ready financials, it’s worth reading “Buying Your First Home When You Run a Small Business” and “Home loans for high‑income self‑employed professionals and owners” alongside this article.

2.3 A simple numbers example

Assume:

• Property value: $1,200,000
• Loan needed: $960,000 (80% LVR)
• Indicative interest rate: 6.0% p.a. (example only)
• Term: 30 years, principal and interest

Monthly repayment ≈ $5,758.

Now add a $300,000 equipment finance facility in your company with a personal guarantee and repayments of $6,000 per month (common for larger fit‑outs).

Even though the equipment loan is “in the company”, most home lenders will treat that $6,000 as a personal commitment when they run the serviceability test. At a 3% buffer, the stress‑tested repayment on your home loan might be closer to $7,500+ per month, plus the buffered impact of your business debts.

If you also push the home into the company or trust, you’re adding complexity and narrowing lender options without actually keeping the risk away from you.

3. Tax basics: home in personal name vs trust vs company

Tax is usually the main reason people first think about using a structure. Ironically, with homes, the tax system tends to reward personal ownership.

3.1 The main residence CGT exemption

If an individual owns a dwelling and it is their principal place of residence, the ATO’s main residence exemption can completely wipe out capital gains tax when they sell, subject to the usual rules (e.g. land size, absence rule).

If a company or discretionary trust owns the home:

• The property is usually not treated as your personal main residence.
• The main residence CGT exemption generally does not apply to that entity.
• Any gain on sale is a taxable capital gain.
• A trust can often access the 50% CGT discount for assets held >12 months; a company cannot.

So, if your home increases from $1.2m to $1.8m over 10–15 years:

• In personal names, that $600,000 gain is likely CGT‑free.
• In a company, the full $600,000 is taxable.
• In a discretionary trust, roughly $300,000 of the gain might be taxable after the 50% discount, depending on your situation.

Over time, the lost main residence exemption can dwarf any other tax benefits you hope to gain from a structure.

3.2 Land tax differences

Land tax rules are state‑based, but a common pattern is:

• Individuals get a tax‑free threshold and then pay progressive land tax.
• Trusts and companies often have lower thresholds or none at all, and in some cases higher rates.

Example only (numbers illustrative, not state‑specific policy):

For many families, ongoing land tax on a trust or company‑owned home is a significant, permanent cost.

3.3 Using company property as your home: FBT and Div 7A

If your company owns the home and you live in it, two tax regimes can bite:

• Fringe Benefits Tax (FBT): Providing housing to an employee/director can be a housing fringe benefit. The company may owe FBT on the value of that benefit unless a specific exemption or concession applies.
• Division 7A (private companies): If a private company allows a shareholder or associate to use an asset (like a house) at less than market value, or lends them money to buy a home, Div 7A may treat that as an unfranked dividend unless it’s on a complying loan agreement.

In practice, advisers often end up building complex workarounds (market rent, Div 7A loan agreements, FBT calculations) just to make a company‑owned home tolerable from a tax perspective.

3.4 How this contrasts with investment properties

Important distinction:

• For a pure investment property, a trust or company can be tax‑effective, because you don’t get the main residence CGT exemption anyway.
• For your home, using an entity usually means voluntarily surrendering one of the most generous tax concessions in the Australian system.

That’s why, as explored further in “Should Your High‑End Home Sit in a Family Trust?”, entity structures tend to be reserved for larger, later‑life homes with low or no debt, where asset protection or estate planning are the dominant goals.