Buying Property Through a Trust: Family vs Unit Trust 2026

We get asked about trust structures often — usually by a client whose accountant has floated holding their next property, or their business premises, inside a family trust. It's a legitimate and common strategy, but also one of the most misunderstood areas of property finance. The trust itself doesn't borrow money the way you might expect, the paperwork is heavier, and not every lender is comfortable with it. Here's how it actually works in practice, in plain English.

What Is a Trust, and Why Would Someone Buy Property Through One?

In Australia, a trust isn't a separate legal person — it's a relationship where a trustee (an individual or, more commonly for property, a company set up specifically for the purpose) holds and manages assets for the benefit of others, the beneficiaries. People buy property through a trust for reasons that usually sit alongside each other: asset protection (keeping a growing property portfolio somewhat separated from personal or business risk), flexibility in how income is distributed among family members each year, and succession planning that avoids assets passing directly through a deceased estate.

What a trust is not is a tax-minimisation shortcut you can set up after the fact. The structure has to be right for your situation from the start, and setup and ongoing compliance costs (deed drafting, a corporate trustee if you use one, annual accounting) are real and ongoing. This is squarely a conversation for your accountant and solicitor — we're not able to give tax advice, and this article isn't it. If the goal is a commercial premises for your own business rather than a residential investment, it's also worth reading how this compares with an SMSF bare trust structure, which works differently again.

Family (Discretionary) Trust vs Unit Trust: What's the Difference?

The two structures most buyers compare are the family trust and the unit trust, and the right one depends on who is actually investing.

Neither structure is a separate legal entity, which matters when it comes to contracts: every document — the purchase contract, the loan, the title — must be signed in the name of the trustee acting as trustee for the trust, not the trust's name alone. Get this wrong and you can create real problems at settlement.

Can You Actually Get a Home Loan If a Trust Is Buying?

Yes, but it works differently to a standard purchase. The trustee — often a corporate trustee set up specifically to hold the property — signs the mortgage and holds the title. However, almost every lender will still require the individual trustees, or the directors of a corporate trustee, to provide a personal guarantee. If the loan defaults, that liability can fall on those individuals or on the beneficiaries, not just the trust's assets.

Lenders assess serviceability on the combined financial position of the trust and the guaranteeing individuals — income, existing debts, and the trust's own financials (expect to provide around two years of tax returns and financials for both). Borrowing limits are also commonly set more conservatively than for an individual owner-occupier purchase, and because some lenders route trust lending through a specialist or commercial channel, the rate and fee structure can differ from a standard home loan. This is exactly the structuring question we help clients work through, reviewing options across a deliberately broad panel of bank, non-bank and specialist lenders through our investment lending service.

What Land Tax and Duty Issues Should You Expect?

This is the part that catches people out, and it's also where we have to be careful: Victoria applies land tax considerations to property held on trust that can differ from property held in an individual's own name, and a further absentee owner surcharge can apply where a trust has what's defined as an absentee beneficiary. The exact rates and thresholds change from year to year and depend on your deed and beneficiaries — rather than quote a figure here that may be out of date by the time you read it, get current written advice from your accountant, or check directly with the State Revenue Office of Victoria, before you commit to a contract.

The same caution applies if you're thinking about moving an existing property into a trust. That's generally treated as a change of ownership — stamp duty and capital gains tax can both be triggered on the property's current market value, even though no money actually changes hands. For most buyers, it's cheaper to decide on the trust structure before the purchase rather than restructure afterwards. Our free guides cover some of the broader planning questions worth raising with your advisers early.

What Does the Process Actually Involve, Step by Step?

If, after advice, a trust purchase is the right fit, the practical sequence usually looks like this:

1. Get the advice first. Your accountant and solicitor confirm the structure suits your situation, and your solicitor drafts the trust deed.
2. Set up the trustee. If you're using a corporate trustee, it's registered with ASIC before you make an offer — not after.
3. Get your finance pre-approval sorted as a trust purchase from the outset, so your borrowing capacity reflects the actual structure you'll be settling under, not a generic individual assessment.
4. Prepare the lender's documentation. Expect to provide a certified copy of the executed trust deed, the trust's ABN and the trustee's ACN, identification for all trustees, directors and adult beneficiaries, and financials for both the trust and the guarantors.
5. Sign everything correctly — contract, loan documents and title all in the trustee's name "as trustee for" the trust.

Skipping step one is the single most common — and most expensive — mistake we see. A trust that's the wrong fit, or set up with the wrong trustee, is genuinely difficult and costly to unwind later. It's a similar lesson to the one we cover in our guide to cross-collateralisation risks for Melbourne investors — the cheapest fix is always the one made before settlement, not after.

Is Buying Through a Trust Right for You?

For some buyers — particularly those building a portfolio for a family group, or structuring for future generations — a trust can be a sound long-term strategy. For others, particularly a first property purchase or a straightforward owner-occupier buy, the extra complexity and cost simply isn't justified. It depends on your goals, family situation and tax position, which is why this decision sits with your accountant and solicitor first, and your broker second — to make sure the lending side of whatever structure you land on is actually workable before you sign anything.

This article is general information only and does not constitute financial, credit, legal or tax advice. It does not take into account your personal objectives, financial situation or needs. Trust structures involve legal and tax considerations that vary by individual circumstance and change over time — always obtain advice from a qualified solicitor and accountant, and confirm current land tax and duty settings with the State Revenue Office of Victoria, before entering into any contract. Credit subject to lender approval and assessment.

Frequently Asked Questions: Buying Property Through a Trust

Can I get a home loan if a trust is buying the property?

Yes, but most lenders will not simply lend to the trust and walk away. Because a trust is not a separate legal person, lenders almost always require the individual trustees — or the directors of a corporate trustee — to sign a personal guarantee, and they assess serviceability using the combined financial position of the trust and those individuals. Borrowing limits for trust purchases are also often set lower than for a standard owner-occupier loan, so confirm your borrowing capacity before you start looking.

What's the difference between a family trust and a unit trust for buying property?

A family (discretionary) trust gives the trustee discretion over how income and capital are distributed each year among a defined group of beneficiaries, which suits one household holding property for the benefit of family members. A unit trust instead issues fixed units, like shares, with distributions following unit holdings — which suits two or more unrelated parties pooling money to buy a property together. Which one fits depends on who's investing and why, so this is a conversation for your solicitor and accountant, not a one-size-fits-all answer.

Do I pay more land tax or stamp duty if a trust owns the property?

Potentially, yes. Victoria applies additional land tax considerations to land held on trust, and a further absentee owner surcharge can apply where a trust has an absentee beneficiary. The exact rate, threshold and whether your trust is caught depends on your trust deed and your beneficiaries, and these settings can change from year to year. We don't provide tax advice — always confirm the current figures for your situation with your accountant or the State Revenue Office before you sign a contract.

Can I transfer a property I already own into a trust later?

You can, but it is generally treated as a change of ownership — meaning stamp duty and capital gains tax can both apply on the property's current market value, even though no money changes hands between you and the trust. For many owners it's cheaper, in both tax and loan-establishment terms, to decide on the trust structure before you buy rather than restructure afterwards. Speak with your accountant before transferring any existing property.