Understanding the Basics of Borrowing in a Company Name

Can You Borrow for Investment Property in a Company Name?

You can borrow for investment property in a company name, and many investors in Canning Vale use this structure to separate business assets from personal wealth and limit liability. A company structure offers asset protection that individual ownership cannot match, particularly where you're acquiring multiple properties or running other business ventures alongside your property investments.

Consider an investor purchasing a unit near Livingston Marketplace who also operates a trades business. Borrowing in the company name means the property sits within the corporate entity rather than under their personal name. If the business faces a legal claim, the investment property remains within the company structure and separate from personal assets such as the family home. The investor retained flexibility to distribute rental income through the company while maintaining a clear line between business and personal finances.

Why Investors Choose a Company Structure

The primary advantage of borrowing through a company is asset protection. A company is a separate legal entity, which means creditors pursuing the company cannot automatically access the directors' personal assets. For investors with significant equity or multiple income streams, this separation reduces exposure.

Company structures also allow for succession planning and portfolio growth. Shares in the company can be transferred or sold without triggering a change in property ownership, making it easier to bring in new investors or pass assets to the next generation. In a scenario where an investor plans to build a portfolio across Canning Vale and surrounding suburbs such as Willetton or Cockburn Central, the company structure scales without the need to refinance or restructure each time ownership changes.

Rental income in a company is taxed at the flat company tax rate rather than the investor's marginal rate, which can be advantageous for high-income earners. However, the company structure does not allow access to the capital gains discount available to individuals, and losses cannot be offset against personal income under the current negative gearing rules.

How Lenders Assess Company Borrowing

Lenders treat company loans differently to loans in an individual's name. The loan is assessed on the company's financials, but directors are usually required to provide personal guarantees, which means the directors remain personally liable if the company defaults. The lender will review the company's income, assets, and liabilities, as well as the guarantors' personal financial position.

For a company purchasing property in Canning Vale's residential zones, lenders typically require at least two years of company financials, including tax returns, profit and loss statements, and balance sheets. If the company is newly established or holds limited assets, the guarantors' personal income and serviceability become the deciding factor. Lenders also apply the serviceability buffer and debt-to-income limits to the guarantors' total exposure, including any personal loans and credit.

The loan application for a company structure takes longer than an individual application due to the additional documentation. Directors should allow time to compile Australian Securities and Investments Commission extracts, trust deeds if the company acts as trustee, and evidence of the company's operational status.

Interest Rates and Loan Features for Company Borrowers

Company loans attract slightly higher interest rates than loans to individuals, typically between 0.10 and 0.30 percentage points above standard investment loan rates. Lenders price this margin to reflect the additional risk and administrative complexity of lending to a corporate entity.

Loan features such as offset accounts and redraw facilities are less common on company loans. Some lenders will not offer these features at all, while others restrict them to specific products. Interest-only terms are available and often preferred by investors using a company structure, as they maximise cash flow and allow the company to deploy funds elsewhere.

Fixed rate options are available, though the break costs on a company loan can be higher if the loan is repaid early or refinanced. For investors planning to expand their property portfolio or refinance within a few years, a variable rate or split structure may offer more flexibility.

Tax Treatment and Deductibility

Interest on a loan used to acquire investment property is deductible to the company, provided the property is genuinely available for rent or producing income. This applies regardless of whether the property is negatively geared. Other holding costs, including rates, insurance, property management fees, and depreciation, are also deductible.

Under the tax reform legislation that commenced from the 2027-28 income year, losses on established residential investment properties acquired after 12 May 2026 are only deductible against other residential property income for individuals, partnerships, and most trusts. Widely held unit trusts, which include most managed investment trusts, are carved out. The legislation does not explicitly exempt private companies from the new negative gearing rules, and investors should confirm the tax treatment with a licensed accountant before proceeding. Properties under contract prior to that date or classified as eligible new builds remain exempt from the restriction.

Capital gains on property held by a company are taxed at the company tax rate without access to the 50 per cent discount available to individuals. For properties acquired after 1 July 2027, the capital gains tax framework changes to an indexed cost base model with a 30 per cent minimum tax rate on real gains for individuals, but this does not apply to companies, which continue to be taxed at the flat company rate on the full nominal gain. Where an investor plans to hold property long-term and benefit from capital growth, the loss of the discount can significantly reduce after-tax returns.

Loan to Value Ratio and Deposit Requirements

Lenders typically cap loan to value ratios on company loans at 80 per cent, though some will lend up to 90 per cent with lenders mortgage insurance. LMI premiums on company loans are higher than on loans to individuals, and not all insurers will cover corporate borrowers.

For a purchase in Canning Vale at 80 per cent LVR, the company needs to provide a 20 per cent deposit plus settlement costs, which include stamp duty, legal fees, and valuation charges. Stamp duty in Western Australia is calculated on the purchase price and does not differ based on whether the buyer is a company or an individual, though foreign investors and absentee owners may face additional duties and land tax surcharges.

Equity from another property can be used as part of the deposit, provided the guarantors have sufficient serviceability to support both loans. For investors looking to leverage equity from their principal place of residence or another investment, a clear understanding of total debt servicing is required before proceeding.

When a Company Structure May Not Be Suitable

A company structure is not appropriate for all investors. The loss of access to the capital gains discount, the inability to offset losses against personal income in certain cases, and the additional administrative burden make it unsuitable where the investor's primary goal is capital growth or where income is variable and tax losses are expected.

First-time investors or those purchasing a single property in Canning Vale are often better served by borrowing in their personal name or through a family trust, depending on their long-term goals. The company structure works when asset protection, succession planning, or portfolio scale justify the higher holding costs and reduced tax flexibility. For those uncertain about the most appropriate structure, consulting a mortgage broker with experience in property investment strategy and a qualified accountant is the recommended first step.

Refinancing a Company Loan

Refinancing an existing company loan follows the same process as an individual loan, but lenders will reassess the company's financials and the guarantors' personal position. If the company's income has grown or the property has increased in value, refinancing can unlock equity for further investment or reduce the interest rate.

Timing is important. Lenders typically require at least two full years of company financials before approving a refinance, and any recent changes to directors or shareholding may trigger additional scrutiny. Where the property has been held for several years and the company's financial position has strengthened, refinancing can deliver a lower rate and access to better loan features.

Call one of our team or book an appointment at a time that works for you. We work with lenders across Australia who understand company structures and can structure your investment loan to support your wealth-building goals in Canning Vale and beyond.

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