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

Trusts are no longer an automatic tax win for property under the new land tax and CGT rules. They still make sense in specific asset protection, estate and income‑splitting scenarios. This guide shows when a trust is still worth the cost and complexity, and when to keep property in personal names.

2 Aug 2026Updated 16 Sept 2026Reviewed 16 Sept 20268 min read

Key Takeaway

This article explains that under Australia’s new land tax and CGT rules from 1 July 2027, trusts still make sense for property mainly where asset protection and succession planning matter more than tax savings. With the 50% CGT discount replaced by CPI indexation and many residential rental losses quarantined in discretionary trusts, the tax edge is reduced. Readers are advised to model personal vs trust ownership over 10–20 years and weigh land tax surcharges and borrowing impacts before using a trust.

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.

Diagram comparing personal and trust property ownership under new tax rules. 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):

Ownership typeLand tax threshold (illustrative)Surcharge riskAdmin complexity
Individual (Australian resident)Full individual threshold (e.g. $1m)LowLow
Family / discretionary trustOften reduced or nil thresholdMedium–highMedium–high
Fixed/unit trust (cleared)Sometimes can access thresholdsMediumHigh

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

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Frequently asked questions

Is it still worth buying an investment property in a family trust?▾
It can be, but mainly where asset protection, income streaming and succession planning matter more than tax alone. For a typical couple buying one or two rentals, higher land tax, quarantined losses and tighter lending rules can outweigh the benefits. You should compare 10–20 year cashflow and tax outcomes for both personal and trust ownership before deciding.
How do new land tax surcharge rules affect trusts?▾
Many states treat discretionary trusts as foreign unless the trust deed permanently excludes foreign beneficiaries and you lodge the right declarations. If not fixed, this can trigger surcharge land tax and duty. Even when corrected, trusts often have lower or no thresholds compared to individuals, which can bring land tax forward by several years.
Do trusts still get the 50% CGT discount on property?▾
For assets sold from 1 July 2027, most individuals and trusts lose access to the 50% CGT discount and instead receive CPI indexation of the cost base. Transitional rules split gains on pre‑1 July 2027 assets into old‑rule and new‑rule portions. This significantly reduces the tax advantage of holding property in a trust purely for discounted capital gains.
Are trusts good for negative gearing after the 2026 reforms?▾
Generally not. Residential rental losses in discretionary trusts are more likely to be quarantined within the trust, so you may not be able to use them against salary or other income. Trusts are now better suited to quality properties that become neutrally or positively geared, where you can stream income to lower‑tax family members over time.
Who should seriously consider a trust for property right now?▾
High‑risk business owners, professionals facing litigation risk, blended families needing tight succession control, and larger family groups planning multiple properties and entities. Even then, the trust should be justified by non‑tax benefits like protection and control, with careful modelling of land tax, CGT, borrowing power and cashflow before committing.

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