Borrowing in a company name for an investment property creates a different set of tax, liability and lending outcomes compared to borrowing in your personal name.
The decision to use a company structure is typically driven by asset protection, tax planning for higher earners, or setting up for a larger property portfolio. Lenders treat company borrowing as commercial lending, which means different deposit requirements, different interest rates, and different serviceability tests. The structure you choose before you apply shapes what loan products you can access and how much you can borrow.
How Company Borrowing Differs from Personal Investment Loans
A company is a separate legal entity. When a company borrows to buy property, the directors usually provide personal guarantees, which means the lender can pursue the directors personally if the company defaults. Lenders do not offer standard investment loan products to companies. Instead, they assess the application under commercial or low-doc frameworks, which usually require a minimum 20 per cent deposit and sometimes up to 30 per cent depending on the lender and the company's financials.
Consider a Mornington-based investor who operates a consulting business through a company and wants to purchase a one-bedroom apartment near the Mornington Pier as a rental. If the company borrows in its own name, the lender will assess the company's trading history, profit and loss, balance sheet, and the directors' personal financial position. The company will need to show at least two years of tax returns, and in some cases an accountant's letter confirming the business is solvent. The interest rate is often 0.3 to 0.6 percentage points higher than a residential investor rate, and the company cannot claim the main residence exemption or access some first-home buyer schemes that individuals might otherwise use.
Tax Treatment and the 2026 Negative Gearing Changes
A company pays tax at a flat 25 per cent for base rate entities or 30 per cent for other companies. Interest on the loan is deductible against the company's income, including rental income and any other business income the company earns. Unlike an individual investor, a company cannot distribute a tax loss to its shareholders. If the rental property produces a loss, that loss stays inside the company and can only offset the company's other income or be carried forward.
From 1 July 2027, the negative gearing rules change for residential properties acquired on or after 7:30pm AEST on 12 May 2026. For individuals, net rental losses on those properties can only be offset against other residential rental income or carried forward. Companies are not individuals, but the same loss quarantine applies to residential rental losses within the company. If the property is an eligible new build, the company can still offset rental losses against its other income. A two-bedroom townhouse built on subdivided land in Mornington after 12 May 2026 would qualify as a new build, whereas a renovated 1980s unit near the foreshore would not.
Capital Gains Tax and Company Ownership
Companies do not receive the 50 per cent capital gains discount available to individuals. When a company sells an investment property, the entire capital gain is included in assessable income and taxed at the company rate. From 1 July 2027, individuals and trusts holding affected assets will use indexed cost base and a 30 per cent minimum tax rate on real gains, but companies were never entitled to the discount and continue under the existing rules. For a property held long-term, this can make company ownership significantly more expensive at the point of sale.
If the Mornington consulting business sells the apartment after five years, the company pays tax on the full gain at 25 or 30 per cent. An individual holding the same property and selling before 1 July 2027 would pay tax on only half the gain at their marginal rate. After 1 July 2027, the individual uses indexation and the 30 per cent minimum rate, which may still produce a lower tax outcome than the company depending on the holding period and rate of inflation.
Serviceability and Loan Features for Company Borrowers
Lenders assess company serviceability using the company's net profit after tax, adjusted for non-cash items such as depreciation. Some lenders allow rental income from the new property to be included at 80 per cent of the lease amount. The APRA serviceability buffer of 3 percentage points still applies, and the debt-to-income cap introduced in February 2026 applies separately to investor lending, though most commercial products fall outside the residential DTI framework.
Company loans are usually offered on principal and interest repayment terms, though some lenders will provide interest-only periods of one to five years if the company demonstrates sufficient cash flow. Redraw and offset facilities are less common on commercial products. Variable rates are standard, and fixed rates for company borrowing are rarely offered beyond three years. If you need flexibility to make extra repayments or access funds for further investment, confirm the loan structure includes those features before you proceed.
When a Company Structure Works in Mornington
A company structure makes sense when asset protection, tax planning or estate planning outweigh the higher borrowing costs and loss of the CGT discount. Mornington attracts a mix of local professionals, Melbourne-based investors, and buyers looking for holiday rentals near the beaches and foreshore dining precinct. Vacancy rates in Mornington are typically lower than in some other Mornington Peninsula locations due to year-round demand from retirees and families, which supports consistent rental income.
If you already operate a business through a company and plan to build a portfolio of three or more properties, holding them in the company can simplify administration and create a clear separation between personal and investment assets. The company can also be structured with multiple share classes to distribute dividends in a tax-effective way, though that requires specialist accounting advice. If your goal is to purchase a single rental property and you are not a high-income earner or business owner, borrowing in your personal name through a standard residential investment loan usually delivers lower rates, better loan features, and access to the CGT discount.
Structuring the Application and Working with a Broker
Company loan applications require more documentation than personal applications. You will need the company's ABN and ACN, the trust deed if the company acts as trustee, financial statements for at least two years, director identification, and a completed director guarantee. Lenders also want to see the registered office address and details of any other secured or unsecured debts the company holds.
A broker who understands commercial and investment lending can match your company structure to lenders who actively support that type of borrowing. Not all lenders offer company loans, and those that do have different criteria around trading history, loan size, and property type. Knowing which lender will assess your company's profit in the most favourable way, or which one allows a lower deposit with a strong director guarantee, can change the outcome. If you are considering a refinance from a personal loan into a company structure, the broker can model the tax and interest cost difference before you proceed.
Borrowing in a company name for investment property suits a specific set of circumstances. Call one of our team or book an appointment at a time that works for you to review your structure, your lending options, and how the recent tax changes affect your decision.
Frequently Asked Questions
Can a company get the same interest rate as an individual on an investment loan?
No. Lenders treat company borrowing as commercial lending, which usually carries an interest rate 0.3 to 0.6 percentage points higher than residential investor rates. The loan also requires a higher deposit, typically 20 to 30 per cent, and directors usually provide personal guarantees.
Does a company receive the 50 per cent capital gains tax discount when selling an investment property?
No. Companies do not receive the CGT discount available to individuals. The entire capital gain is included in assessable income and taxed at the company rate of 25 or 30 per cent, which can make company ownership more expensive at the point of sale.
How do the 2026 negative gearing changes affect companies that own rental property?
From 1 July 2027, rental losses on residential properties acquired on or after 12 May 2026 can only be offset against other residential rental income or carried forward. This applies to companies as well as individuals, unless the property is an eligible new build.
What documents does a lender need to approve a company investment loan?
Lenders require the company's ABN and ACN, financial statements for at least two years, director identification, a completed director guarantee, and details of any other company debts. If the company acts as trustee, the trust deed is also required.
When does it make sense to borrow in a company name instead of a personal name?
A company structure works when asset protection, tax planning for higher earners, or managing a larger portfolio outweigh the higher borrowing costs and loss of the CGT discount. For a single rental property, borrowing personally usually delivers lower rates and access to the CGT discount.
