Skip to main content
Key Takeaways
- A company home loan in Australia holds the property and the debt in the company’s name, with directors typically providing personal guarantees.
- A self-managed super fund can borrow only through a limited recourse borrowing arrangement, which shields the fund’s other assets if the loan defaults.
- From 10 August 2026, new limited recourse loans may fund business real property only, so residential purchases inside a fund rely on cash or an existing arrangement.
- Each structure carries tax, legal, and lending consequences, so tailored advice before you commit is worthwhile.
A company home loan in Australia works differently from the mortgage most people take out in their own name. The borrower is a company, the property sits on the company’s balance sheet, and the people behind it usually stand behind the debt. That shift changes how a lender assesses the application, what paperwork is involved, and who carries the risk if repayments fall behind.
Self-managed super funds (SMSFs) follow a separate set of rules, and those rules changed in 2026. Borrowing to buy property through a fund is now far more limited than it was even a year ago. Whether you are weighing a company purchase, a fund purchase, or a family trust, a company and trust loan broker can help you compare the options against your goals before any contract is signed.
How Company Home Loans Work in Australia
Borrowing through a company reshapes the loan around a corporate entity rather than an individual. Lenders still want to see that the debt can be repaid comfortably, but they assess the arrangement differently. These loans share a few common features:
Borrower and Property Ownership
When a company borrows, the company is both the borrower and the registered owner of the property. For example, a company that buys an investment property signs the loan and appears on the title. Shareholders and company secretaries are not usually part of the loan itself, though a major shareholder outside the directorship may occasionally be asked to take part. The individuals involved do not own the property directly. They own the company that owns it.
Director Guarantees and Personal Liability
Lenders rarely rely on a company alone. Directors are typically asked to sign personal guarantees, which means they promise to cover the loan if the company cannot. A guarantee can be capped at a set figure or left open, and it can be limited to the current loan or extended to future facilities, so the wording matters. Because a guarantee puts personal assets at risk, many lenders require directors to obtain independent legal advice before signing.
Servicing Checks and Document Requirements
Assessment usually rests on the company’s financial position together with the directors’ personal finances. A lender building a full picture will commonly ask for:
- Company tax returns and financial statements for the past one to two years
- Business bank statements showing cash flow and account conduct
- Personal income evidence for each director and guarantor
- Details of existing company and personal debts
- Company constitution and, where relevant, any trust deed
- Identification for all directors and guarantors
This is a general guide only, and each lender sets its own document checklist depending on the purchase.
Self-employed directors often find the paperwork heavier than a standard application, since the lender is assessing both the entity and the people behind it. Clean records and up-to-date tax lodgements tend to make the process more straightforward.
Loan Terms, Rates, and Deposits
Company loans can carry different pricing and deposit expectations than an owner-occupied mortgage. Depending on the lender and the property, a company may borrow a large share of a standard residential investment value, while low documentation loans and commercial purchases are usually assessed on tighter terms. Interest rates may sit a little higher to reflect the added complexity, and some lenders limit which loan products a company can access.
Why Borrowers Use a Company to Hold Property
A company structure is not automatically better or worse than owning in your own name. It suits some situations and adds unnecessary cost and admin to others. People usually choose it for a few reasons:
Asset Protection Considerations
Holding property in a company can separate that asset from an individual’s personal affairs, which some business owners value for risk reasons. The protection is not absolute, since director guarantees, tax debts, and insolvent trading rules can still reach personal assets. Even so, keeping investment property at arm’s length from a trading business, or from personal exposure, is a common motivation. Whether it genuinely helps depends on your wider circumstances and is a question for a lawyer and accountant.
Tax Treatment and Ownership Flexibility
A company pays tax on rental income and gains at the company rate rather than at individual marginal rates, which can suit higher-income investors in some years. Companies do not receive the individual capital gains tax (CGT) discount, and moving money out of a company has its own tax consequences. The numbers depend heavily on your income, the property, and how long you hold it, so this is a conversation for your accountant.
Portfolio Growth and Succession Planning
Investors building a portfolio sometimes use a company, or a company acting as trustee of a trust, to make ownership and future transfers tidier. Shares in a company can be easier to pass on than retitling a property, and a corporate structure can bring several investors together under one clear set of rules. These benefits come with ongoing costs, annual obligations, and added complexity, so they tend to make sense for larger or longer-term plans rather than a single purchase.
SMSF Home Loans and the Limited Recourse Borrowing Rules
A self-managed super fund can borrow, but only in narrow circumstances and under strict conditions set by superannuation law and overseen by the Australian Taxation Office (ATO). The main pathway is a limited recourse borrowing arrangement (LRBA), a structure designed to protect the rest of the fund if a single geared investment goes wrong. Several rules shape how these arrangements must be set up and run:
Limited Recourse Borrowing Structure
Under an LRBA, the fund borrows to buy one asset, and that asset is held in a separate holding trust until the loan is repaid. Should the fund default, the lender’s rights are limited to that single asset. The fund’s other investments stay out of reach. The fund receives the rental income and any growth while the loan runs, and it gains legal ownership once the debt is cleared. You can read more about what an SMSF can buy.
Single Acquirable Asset Rule
An LRBA can fund only a single acquirable asset, or a collection of identical assets treated as one, such as a parcel of the same shares. For property, that generally means one title. Buying two adjoining lots on separate titles, or funding a build in stages, can breach the rule. Getting this wrong can be expensive to unwind.
Holding Trust and Beneficial Ownership
The asset sits in a holding trust, sometimes called a bare trust or custodian trust, with the fund holding the beneficial interest. Superannuation law does not dictate the exact type of trust, but it must give the fund trustee a genuine right to the asset and the ability to take legal ownership after repaying the loan. Complex or discretionary trust structures usually will not satisfy this, so the holding trust needs to be set up with care. The ATO sets out how these arrangements must work, and an SMSF lending broker can help with the setup.
Repairs, Maintenance, and Improvement Limits
Borrowed money in an LRBA can be used to buy and maintain the asset, but not to improve it. Repairing storm damage or replacing a worn roof is generally fine, since it restores the asset. Adding a second storey, or changing the property so much that it becomes a different asset, is treated as an improvement and is not allowed with borrowed funds. The line between a repair and an improvement is not always obvious, so fund trustees often check before spending.
Arm’s Length Terms and Related Party Loans
An LRBA must be set up and run on genuine commercial terms. Where a related party lends to the fund, the ATO publishes safe harbour terms covering matters such as interest rates and loan-to-value ratios. Falling outside those terms does not automatically make an arrangement non-commercial, but the trustees would then need to show the loan reflects arm’s length dealing. A mistake here can expose the fund’s income to a much higher tax rate, so the terms are worth documenting properly.
What Changed for SMSF Residential Borrowing in 2026
For years, funds could use an LRBA to buy residential investment property. That option is closing for new arrangements. A change to superannuation law, which received Royal Assent on 26 June 2026, narrows what a fund can borrow to buy. The change affects new and existing arrangements differently:
New Business Real Property Condition
From 10 August 2026, a new condition applies to any real property bought under a new LRBA. The property must meet the definition of business real property in superannuation law, which broadly means commercial premises used wholly and exclusively in a business. Residential dwellings do not meet that test. In practical terms, a fund can no longer enter a new LRBA to buy a house or apartment as an investment. How it applies to a specific purchase is worth confirming with a specialist before acting.
Existing Loans and Grandfathering
Funds that already hold residential property under an LRBA are not affected. Existing arrangements continue as before, with no requirement to sell or unwind them, and they keep the concessional tax treatment that applies inside super.
Protection During the Transition Window
A transition window applies for purchases already underway. Where a contract to buy residential property is signed before the commencement date, the arrangement is generally protected even if settlement happens afterwards. That protection hinges on the contract date rather than on loan approval or settlement, so anyone mid-purchase should confirm exactly where they stand. This is a narrow window for finishing deals in progress, not an extension for starting new ones.
Refinancing Rules After the Change
Refinancing an existing residential LRBA is generally still permitted, since it maintains borrowing that already exists. That said, switching lenders or materially changing the loan terms could be viewed as entering a new arrangement, and further guidance on this point is expected. Anyone considering a refinance of a fund loan should take specific advice first rather than assume a switch will be treated the same way.
Alternatives Still on the Table
The change does not touch every strategy. A fund can still buy residential property outright using its own cash, with no borrowing involved, where that fits the fund’s investment strategy. Borrowing for commercial property that qualifies as business real property remains available. Other geared and ungeared investments held inside super, such as shares and managed funds, are unaffected. For many business owners, the commercial pathway remains the most useful option.
Business Real Property and SMSF Commercial Lending
With residential borrowing closed to new arrangements, business real property has become the main way a fund can still gear into property. The definition is precise, and not every property qualifies:
Business Real Property Test
Business real property broadly means land and buildings used wholly and exclusively in one or more businesses. A warehouse, a retail shop, a consulting room, or a factory can qualify, provided the use test is met. The definition sits in superannuation law and is applied to the actual use of the property, not simply its zoning or description. Because the test turns on how the property is used, borderline cases deserve a careful look before a fund commits.
Premises Used in Your Own Business
One of the more common uses is a business owner buying their own premises through their fund and leasing it back to the operating business. This related party arrangement is allowed for business real property, provided the lease runs on genuine commercial terms at a market rent. Rent then flows into the fund rather than to an outside landlord. It is a structure with real obligations, so it needs to be documented and maintained correctly.
Property That May Not Qualify
Not every non-residential property counts as business real property. Vacant land, mixed-use property with a residential component, and premises with meaningful private use can fall outside the definition or need careful review. A property that looks commercial on the surface may still fail the wholly and exclusively test. Since the borrowing rules now depend so heavily on this classification, confirming it early can save a great deal of trouble later. You can also see how commercial loans work more broadly.
Comparing Your Ownership Options
No single structure works for everyone, and the right choice depends on your goals, your tax position, and how long you plan to hold the property. The table below compares the main options:
| Ownership option | Who owns the property | Borrowing for residential | Typical considerations |
|---|---|---|---|
| Own name (individual or joint) | You, personally | Available on standard terms | Simple setup, individual tax rates, main residence rules may apply |
| Company | The company | Available, with director guarantees | Asset separation, company tax rate, no individual CGT discount |
| Family trust with corporate trustee | The trustee, for beneficiaries | Available, with guarantees | Flexible distributions, added admin, advice essential |
| SMSF (from 10 August 2026) | The fund, via a holding trust | Not available for new residential loans | Business real property only, strict compliance, cash purchases still allowed |
This comparison is a general guide only. Each option carries tax, legal, and lending consequences that vary with your circumstances, and lender criteria differ, so confirm the detail with qualified advisers before choosing.
Planning Your Next Step
Choosing how to hold and finance a property is a series of smaller decisions about ownership, tax, risk, and the rules that apply to each structure. Company lending rewards clean records and a clear purpose, while fund borrowing now sits inside a much tighter set of conditions than it did a year ago. The sooner you map your situation against those rules, the fewer surprises you will meet later.
A good next step is a single conversation that pulls the lending, tax, and legal threads together before you commit to a structure or sign a contract. The team at Loanworx Group works with company directors, trustees, and fund members to compare pathways and arrange finance that suits the plan. As a company and SMSF loan broker, the focus is on matching the structure to your goals and keeping the process straightforward.
Frequently Asked Questions (FAQs)
1. What is a company home loan in Australia?
A company home loan is finance where a company borrows to buy or refinance a property, and the company holds the title rather than an individual. The people behind the company usually guarantee the loan in their personal capacity. Investors and business owners often use this structure for asset protection or tax reasons, though it adds cost and admin compared with borrowing in your own name.
2. Do directors have to guarantee a company home loan?
In most cases, yes. Lenders generally require every director to provide a personal guarantee, which makes them personally responsible if the company cannot repay. A guarantee may be capped or unlimited, so the wording is worth reading closely. Many lenders also ask directors to obtain independent legal advice before they sign.
3. Can an SMSF still borrow to buy residential property?
Not for new arrangements from 10 August 2026. A change to superannuation law limits new limited recourse borrowing to business real property, which does not include residential dwellings. Funds that already hold residential property under a loan are not affected, and a fund can still buy residential property outright using its own cash where that suits its investment strategy.
4. What is business real property?
Business real property is land and buildings used wholly and exclusively in one or more businesses, such as a shop, office, warehouse, or factory. It is the one category of real estate a fund can still borrow to buy under the current rules. Vacant land, mixed-use sites, and property with private use may not qualify, so the classification is worth confirming early.
5. Can I live in a property my SMSF owns?
No. A fund member or a related party generally cannot live in, or rent, residential property the fund owns. The property must be held for the sole purpose of providing retirement benefits, at arm’s length from members. Business real property leased back to a member’s business is treated differently, provided the lease runs on genuine market terms.
6. Is a company home loan more expensive than a standard mortgage?
It can be. Interest rates may sit a little higher to reflect the added complexity, and some lenders limit which products a company can access or ask for a larger deposit. The gap varies by lender and by the property, so it helps to compare options rather than assume a single rate. A broker who works across company and fund lending can talk you through where a particular purchase is likely to land.
7. Should I buy an investment property in my own name or through a company?
There is no single right answer. Owning in your own name is simpler and keeps the individual capital gains tax discount, while a company can help separate assets and may suit some tax positions, at the cost of more admin and no personal discount. The better choice depends on your income, your plans, and your risk profile, so it is worth mapping the numbers with an accountant and a broker before deciding.
This article provides general information only and does not take into account your personal objectives, financial situation, or needs. It is not financial, tax, legal, or credit advice, and lending rules and government requirements can change. Before acting on anything here, consider speaking with a qualified mortgage broker, accountant, or licensed adviser who can consider your circumstances.
