Trusts, Land Tax and CGT After the 2026 Reforms: When They Still Work

Using a trust for property under the updated land tax and CGT rules still makes sense when you value asset protection, succession control and income streaming more than short‑term tax savings. For many everyday buyers, especially of the family home, personal ownership will now be simpler, cheaper and often more tax‑effective.

In other words: trusts are now a niche tool, not the default. You need to be clear on why you’re using one before you add the cost and complexity.

The new CGT and land tax rules have narrowed the gap between personal and trust ownership.

1. What’s actually changed for trusts, land tax and CGT?

1.1 Key CGT reforms hitting trusts

From 1 July 2027:

1. The 50% CGT discount for resident individuals and most trusts is replaced with CPI indexation of the cost base (except some specified investments and new dwellings).[4][20]
2. Gains on assets held before 1 July 2027 are split into a ‘deferred’ pre‑reform portion (potentially still discount‑eligible) and a post‑reform indexed portion.[5][14]
3. A 30% minimum tax will apply to many capital gains of resident individuals; the practical interaction for trust distributions is still being clarified.

This doesn’t ban trusts, but it flattens the old advantage of buying growth assets in a discretionary trust just to share a discounted gain later.

1.2 Land tax and surcharge pressures on trusts

Across NSW, VIC and QLD in particular, key themes are:

• Lower or no tax‑free thresholds for trusts compared with individuals.
• Surcharges on ‘foreign’ trustees unless the trust deed and notifications clearly exclude foreign beneficiaries.
• More data‑matching and declarations each year.

Indicative comparison (illustrative only – check your state’s current rules):

These settings mean a trust can push you into land tax liability years earlier than if you held the same property personally.

2. When a trust still makes sense for property

2.1 High‑risk professions and business owners

If you’re in a litigation‑exposed field (medical, construction, professional services) or you run a trading business with real risk, keeping growth assets outside your personal name can still be rational asset protection.

A discretionary trust can:

• Separate investment property from your trading entity.
• Hold equity you plan to build over decades.
• Make it harder for future creditors to reach that asset (subject to clawback rules and timing).

The trade‑off is often lower borrowing power and higher land tax. Our case‑study guide on structure trade‑offs digs into this in more detail: see Real‑World Case Studies: Asset Protection vs Borrowing Power.

2.2 Blended families and succession planning

Where you want control over who ultimately benefits, a trust can still beat simple joint personal ownership. For example:

• Second marriages where you want income to a surviving spouse, but capital to children from a first relationship.
• Multi‑child families where one or two children will be more active in managing property.

Combine this with robust documentation around family contributions – as we cover in How To Avoid Family Conflict When Buying Property Together – and trusts can reduce future disputes, not create them.

2.3 Long‑term income streaming (not loss streaming)

Under the negative‑gearing reforms, residential rental losses in discretionary trusts are increasingly quarantined in the trust, rather than offset against your salary.[15]

So the smart use‑case shifts to:

• Buying quality assets that are expected to be positively geared or near‑neutral within a few years.
• Streaming the rental income to lower‑income adult beneficiaries (e.g. uni‑age kids or semi‑retired parents) in later years.

This is less about a big CGT arbitrage and more about smoothing taxable income across the family over time.

2.4 Multiple properties, multiple owners, one central plan

Larger family groups with:

• 3+ investment properties, across states, and
• a mix of SMSF, personal, company and trust holdings

may still find that using a trust for new acquisitions gives flexibility to move income around as retirement or business exits approach. Hubs like our guide on getting SMSF, personal and company moves in sync become critical in that environment.

3. When you’re usually better off not using a trust

3.1 The family home

Putting the main residence into a trust or company still generally sacrifices the full main residence CGT exemption and may complicate lending.[19]

For most households, the answer hasn’t changed: keep the home in personal names. We unpack this in detail in Should You Buy Your Home Personally, in a Company or in a Trust?.

3.2 Small investors buying one or two rentals

Under the new rules, a typical couple buying one or two established rentals will often find:

• Land tax: higher ongoing cost in a trust.
• CGT: personal vs trust is now closer, with indexation applying in both cases for post‑2027 gains.[14]
• Borrowing power: many lenders shade trust income more harshly and apply tighter serviceability.

Unless you have a clear asset‑protection or succession need, the structure may not justify several thousand dollars per year in accounting, legal and land tax costs.

3.3 Short‑term speculators

Trusts used to be popular with short‑term renovators or flippers chasing the 50% discount after 12 months. Post‑reform:

• Many such projects are taxed closer to full marginal rates once the 30% minimum and indexation mechanics are factored in.
• The ATO can also treat rapid flips as business income regardless of structure, wiping out CGT concessions altogether.

If you’re planning fast in‑and‑out deals, the structure is usually not your main problem – the risk and tax profile is.

Under indexation, non‑tax reasons need to drive the decision to use a trust.