Simple hacks to borrow in a company name for property

Most plasterers running their own business eventually hit a point where they want to buy investment property. The question of whether to borrow in your own name or through your company or trust comes up fast.

Borrowing through a company structure can protect your personal assets, separate business risk from property investment, and make tax planning cleaner if you're already trading through a company. But lenders treat company loans differently, and the application process is stricter than a personal investment loan.

Can You Actually Borrow in a Company Name?

You can borrow in a company name, but not all lenders offer it, and those that do apply tighter conditions. The lender will usually require a personal guarantee from the directors, which means you're still personally liable if the company defaults. The loan is assessed on the company's ability to service the debt, not just your personal income, so lenders want to see consistent trading history and clean financials.

Consider a plasterer who's been running a company for six years with solid annual turnover. The company wants to buy a two-bedroom unit as a rental. The lender will ask for two years of company tax returns, the company trust deed or constitution, director identification, and evidence the company can service the loan after covering all business expenses and director drawings. If the company is new or the financials are thin, most lenders won't go near it.

The personal guarantee binds you to the debt anyway, so the asset protection benefit only applies if the company defaults for reasons unrelated to the loan itself. If you're guaranteeing the loan and the property loses value, you're still on the hook.

Why Plasterers Use Company Structures for Investment Property

Borrowing in a company name makes sense when you're already running your plastering business through a company and want to keep property assets separate from your personal balance sheet. It can make succession planning easier, especially if you plan to bring in partners or pass the business on down the track.

A company structure also lets you control how rental income is distributed. If the property makes a profit, the income is taxed at the company rate, which may be lower than your marginal personal rate depending on your total income. If the property runs at a loss, the company can only offset that loss against other company income, not your personal wage. Under the new rules that start in the 2027-28 income year, losses on established residential investment properties acquired after 12 May 2026 can only be offset against other residential property income, whether you borrow personally or through a company.

Trusts are another option. A family trust can distribute income to beneficiaries in lower tax brackets, but trust loans come with their own requirements. Some lenders will lend to a trust, others won't. The trustee is usually a company, and the directors of that trustee company will need to provide guarantees. The structure adds cost and complexity, so it's only worth it if the tax and asset protection benefits stack up for your situation.

What Lenders Want to See Before They'll Lend to Your Company

Lenders assess company loan applications differently. They'll look at the company's trading history, usually at least two full financial years, and they'll want to see the company is profitable or at least breaking even. If you're a sole director taking a wage, they'll assess whether the company can service the loan after paying you enough to live on. If the company can't demonstrate consistent income, the application won't get off the ground.

You'll need the company's last two years of tax returns, profit and loss statements, balance sheet, a copy of the company trust deed or ASIC extract, director identification, and proof the company has a genuine need for the finance. The lender will also want to see the rental income from the property, although they'll typically only count 80 per cent of it to account for vacancy and maintenance costs.

Some lenders will accept low doc options for company borrowers, which can help if your financials are harder to verify or if the company structure is complex. But low doc loans usually come with higher interest rates and lower maximum LVRs, often capped at 80 per cent.

The deposit requirement is the same as a personal investment loan. Most lenders want at least 20 per cent deposit to avoid LMI, although some will lend at higher LVRs if you're willing to pay the insurance premium. The deposit can come from company funds, director loans, or personal savings injected into the company.

Interest Deductibility and Tax Treatment for Company-Owned Investment Property

Interest on a loan taken out by a company to buy investment property is deductible against the company's assessable income, provided the property is genuinely held to produce rental income. The Australian Taxation Office expects the property to be available for rent and advertised at market rates. If the property sits vacant without genuine attempts to lease it, the deduction may be disallowed.

Other holding costs like rates, insurance, property management fees and depreciation are also deductible for the company. But if the company makes a loss on the property, that loss can only be offset against other income the company earns, not against your personal income. If the company has no other income, the loss is quarantined until the company generates assessable income in a future year.

Under the new negative gearing rules, losses on established residential investment properties acquired after 12 May 2026 can only be offset against income from other residential properties, including capital gains on residential properties, from the 2027-28 income year onward. This applies to companies, individuals, partnerships and most trusts. If your company buys an eligible new build, full negative gearing continues to be available.

Capital gains on property sold by a company are taxed at the company rate, and companies don't get access to the 50 per cent CGT discount that individuals receive. From 1 July 2027, individuals will move to a cost base indexation model with a 30 per cent minimum tax rate on indexed gains, but companies remain taxed at the flat company rate with no discount.

When Borrowing Personally Makes More Sense Than Using a Company

If you're a plasterer buying your first or second investment property and you're not already running a complex business structure, borrowing in your personal name is usually cleaner. The paperwork is simpler, you'll have access to more lenders and loan products, and you won't need to maintain separate company accounts and tax returns just for the property.

Personal borrowing also gives you access to the 50 per cent CGT discount when you sell, at least for gains accruing before 1 July 2027. After that date, you'll have the option to index your cost base and pay a minimum 30 per cent tax rate on real gains, which may still be better than the flat company tax rate depending on your circumstances.

If asset protection is your main concern, talk to an accountant or lawyer about whether a company structure actually delivers the protection you think it does. The personal guarantee required by most lenders means you're liable anyway, and if your plastering business is the main income source backing the loan, separating the property into a different entity doesn't shield you from much.

For most plasterers starting out in property investment, a personal loan structure is the way to go. Company and trust structures make sense once your portfolio grows, your business structure is already established, and the tax and succession benefits outweigh the extra cost and complexity.

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