Structuring Family Trusts and Companies to Help Children Buy Property

Helping the next generation into the property market is no longer just about a cash gift or going guarantor.

Used well, family trusts and investment companies can give your children a leg‑up while keeping control, managing tax and protecting assets. Used badly, they can strangle borrowing power, create avoidable tax bills and lock everyone into a structure that is hard to unwind.

This guide steps through how to use family trusts and companies to support your children’s home and investment purchases, and what you can realistically set up or progress this week.

1. Core idea: what are you actually trying to achieve?

In the first 5–10 minutes of most family meetings, the real aims usually boil down to some mix of:

1. Help a child buy earlier or in a better location.
2. Keep things fair across siblings.
3. Protect family assets from divorce, business risk or bad decisions.
4. Manage tax across the family group, especially after the 2026–27 reforms.
5. Keep flexibility for future changes and estate planning.

Trusts and companies are just tools. The critical decision is where you want ownership, control and risk to sit.

At a high level you have four levers:

• Whose name is on the title.
• Who is borrowing and giving guarantees.
• Which entity (individual, trust, company, SMSF) is the borrower/owner.
• How cashflows (rent, interest, support payments) move between family members.

The right mix depends on whether the property is:

• A home for your child.
• A pure investment you ultimately want them to control.
• A blended “family asset” (e.g. shared weekender, inter‑generational home, or future downsizer).

We’ll walk through each scenario.

Actionable starting point: Before speaking to anyone, write a one‑page brief with:

• Who you’re trying to help.
• Whether this is their home or an investment.
• The rough price range and timing.
• How much control you want to retain over decisions.

Bring that brief to your accountant and broker. It will save an hour of back‑tracking.

Trusts and companies are just tools to align ownership, control and risk across the family.

2. Quick readiness check: is a trust or company even appropriate?

For many families, owning in personal names with a simple parental loan or guarantee is safer and cheaper than a structure.

Use this checklist before going further.

2.1 When a trust or company might make sense

A structure is more likely to be worth it if:

• You have or expect $2m+ in total investment assets.
• One or more parents are in the top marginal tax bracket.
• There is real concern about family law risk (divorce, business failure, litigation).
• The property is clearly a long‑term investment, not a short stepping‑stone home.
• Siblings will be co‑beneficiaries (e.g. a family portfolio, not “Tom’s house”).
• You already run a family trust or investment company with a decent portfolio.

2.2 When a trust or company is usually overkill

Think twice about a structure if:

• The child’s main goal is “my own home” and they want full control.
• Purchase price is relatively modest (e.g. sub‑$1m in a non‑prestige area).
• Family wealth is still under $1–2m and growing.
• You mainly want to boost borrowing power using your income — lenders usually prefer guarantees to complex entities for this.

In those cases, you’re often better off:

• Helping with cash for deposit or
• Acting as a guarantor against your property, or
• Making a secured loan to your child documented with a simple loan agreement.

We cover those paths in more detail in the sibling guides:

• Structuring Family Assistance for Children Buying in Expensive Markets
• Family Guarantees vs Cash Gifts: Control, Tax and Lending Implications

3. How lenders view trusts and companies helping a child

Trust and company structures look sophisticated on paper, but banks mostly ask three blunt questions:

1. Who is really paying the loan?
2. Can we enforce against someone with assets and income?
3. Is this a home or an investment, and for whom?

3.1 Typical lender rules with family trusts and companies

Most mainstream lenders will:

• Want personal guarantees from all adult beneficiaries/directors with a real interest.
• Limit LVRs (loan‑to‑value ratios) for trusts/companies (often 70–80% instead of 80–90%).
• Treat the loan as investment lending, even if your child lives there.
• Apply a 3%+ APRA buffer above the actual rate when assessing repayments.

This can reduce how much the structure can borrow on its own.

As we explain in Buying a Rose Bay apartment in a company or trust: what banks really do, you usually trade off higher cash up‑front and more guarantees to get the asset into a structure.

3.2 Using trust or company income to support a child’s loan

Sometimes the structure holds existing investments (shares, other properties) that generate income or distributions. That income can support your child’s borrowing – but only if it’s stable and well‑documented.

Most banks will want:

• 2+ years of financials for the trust/company.
• Evidence that distributions or dividends are actually paid to the individual and consistently used as personal income.
• Clear shareholding or trust distribution resolutions.

The detail is covered in our guide How to Turn Company, Trust and Investment Income Into Borrowing Power and the Green Square case study Using company, trust and partnership income to buy in Green Square.

4. Four main ways to structure intergenerational property with entities

There are many variations, but most plans fit into one of four patterns.

4.1 Model A – Child owns the property, parents support via trust or company

Ownership: Child’s personal name(s).

Support from entity:

• The family trust or company makes a secured or unsecured loan to the child for deposit/costs, or
• The entity pays a distribution/dividend to the child to boost income and savings.

Pros:

• Straightforward from a lender’s perspective – a normal owner‑occupied loan.
• Child gets main residence CGT exemption if it’s their home.
• Trust/company stays in the background; easier future refinancing or sale.

Cons:

• Parents have less control over sale or refinancing unless they document the loan properly.
• If the relationship breaks down, the house is generally part of the child’s family law pool.

When it suits:

• You want your child to truly own their home, but you’re happy to be a “family bank”.

This model often pairs well with:

• A proper loan agreement between the family trust/company and the child; and
• A registered second mortgage or caveat to protect the parents’ contribution.

It also meshes cleanly with our broader loan-structuring rules about keeping one primary loan per property with clear splits, as outlined in multiple guides, including Using Dover Heights Home Equity to Buy a Weekender Safely.

4.2 Model B – Family trust or company owns the investment, child participates later

Ownership: Discretionary family trust or investment company.

Use: Usually a pure investment property rented out at arm’s length.

Support for child:

• Child may receive trust distributions or dividends from rental profits.
• Over time, they may become an appointor, director or key decision‑maker for the entity.

Pros:

• Stronger asset protection from children’s relationship/business risks.
• Easier to share benefits between siblings.
• Parents can stage control over time.

Cons:

• Higher complexity and costs – trust deed, company setup, annual returns, tax advice.
• Rental losses inside many discretionary trusts will be quarantined after 2027, as discussed in our piece on family trust gearing after tax reforms.
• No 50% CGT discount for a company, and new CGT rules for trusts from 1 July 2027.

When it suits:

• Larger families building a shared investment portfolio.
• Parents in high tax brackets wanting to stream income over time.

We’ll unpack the tax and 2026–27 changes below.

4.3 Model C – Company or trust co‑owns property with child

Ownership: Title split between the child and a trust or company (e.g. 50/50 tenants in common).

Use:

• Sometimes the child lives in their share of the home.
• The other portion (owned by the entity) is effectively an investment.

Pros:

• Parents keep equity and control over “their” share.
• Can be used to reflect different contribution levels (e.g. parents fund 40%, child 60%).

Cons:

• Very complex for tax – mixed main residence and investment ownership.
• Harder to refinance or sell without a full buy‑sell agreement.
• High risk of later disagreement without detailed documentation.

When it suits:

• Limited and specific situations, usually at higher price points when parents want meaningful ownership.

If you’re considering this, pair it with the sibling guide Avoiding Family Conflict: Agreements, Documentation and Exit Plans at Higher Price Points.

4.4 Model D – Parent entity is borrower, child is occupier only

Ownership: Trust or company.

Borrower: Same trust or company, with parental guarantees.

Use: Child lives in the property, paying market or near‑market rent.

Pros:

• Parent entity retains full ownership and control.
• Stronger asset protection for parents; easier to treat as part of portfolio.

Cons:

• From the ATO’s perspective, this is an investment property, not the child’s home.
• Trust/company cannot claim a main residence exemption; full CGT applies on sale.
• Some lenders dislike “related party occupancy” unless rent is commercial and documented.

When it suits:

• Parents prioritise control and protection over tax efficiency for the child.
• Child may not be financially ready or stable enough to go on title.