Top tips to borrow for property in a company name

Borrowing through a company means different lending rules apply

When you borrow in a company name to purchase investment property, the loan sits outside the National Consumer Credit Protection Act. That means lenders assess the application under commercial lending criteria, not standard residential mortgage serviceability rules. The company becomes the borrower, directors typically provide personal guarantees, and the lender evaluates the company's financial position alongside your personal capacity to support the loan.

Consider a serving officer who operates a small business on the side and wants to separate investment property holdings from personal assets. They set up a company to purchase a rental property. The lender requires audited or reviewed financials for the company, director guarantees from all shareholders holding more than 20 per cent equity, and evidence that rent from the property will service the debt. The officer also needs to show personal income and assets sufficient to support the guarantee. The approval took longer than a standard residential loan and required a full business lending pack, but the structure gave clear asset protection and a defined pathway for adding more properties under the same entity.

Lenders treat company borrowing as commercial credit. They do not apply the 3.0 percentage point serviceability buffer that APRA requires for residential lending to individuals. Instead, they assess whether forecast rental income, combined with any other company revenue and director support, will cover loan repayments with a margin. Loan-to-value limits are generally lower than for personal borrowing. Most lenders cap company investment loans at 70 to 80 per cent LVR, and some will not lend above 70 per cent without additional security or a director guarantee supported by substantial personal assets.

Why police officers consider company structures for investment property

Asset protection is the main reason. When the property sits in a company, it is separated from your personal name. If someone makes a claim against you personally, they cannot directly access assets owned by the company. The same applies in reverse: a liability tied to the company does not automatically extend to your personal assets, although director guarantees do create personal exposure to the loan itself.

Tax planning is another driver. A company pays a flat tax rate on profit, which can be lower than your marginal personal rate if you are in a higher income bracket. Franking credits flow through to shareholders when the company distributes dividends. Losses from the investment property are quarantined inside the company and cannot be offset against your personal salary, so negative gearing benefits do not apply in the same way. That makes company structures less appealing when the property runs at a loss, but more appealing when it generates positive cash flow or when you plan to accumulate multiple properties and eventually sell them within a broader business strategy.

Lender requirements and documentation for company borrowing

Most lenders require the company to be registered, hold an Australian Business Number, and have operated for at least two financial years before they will consider an investment loan application. Some lenders accept newly registered companies if the directors have strong personal financials and provide full recourse guarantees.

Documentation includes company tax returns, financial statements prepared or reviewed by an accountant, and a current ASIC company extract. Lenders also ask for personal tax returns and payslips from each guarantor, along with a personal asset and liability statement. The property must be valued by a lender-approved valuer, and rent is typically assessed at 80 per cent of market rent to account for vacancy and management costs. If you are on rotating shifts, lenders assess your income the same way they would for a standard investment loan for police officers, using your base salary plus any regular allowances confirmed by your employer.

How interest deductibility and tax treatment differ in a company structure

Interest paid on the loan is deductible against the company's assessable income, which includes rent and any other revenue the company earns. If the property runs at a loss, that loss stays within the company and can be carried forward to offset future company profits. You cannot claim the loss against your personal salary. The new negative gearing rules that apply to individuals from the 2027-28 income year do not apply to companies in the same way, because company losses were already quarantined. That does not make the structure exempt from tax changes, it just means the impact is different.

When the company eventually sells the property, it pays capital gains tax on the profit at the company rate with no discount. Individuals get a 50 per cent discount on gains accruing before 1 July 2027 and cost base indexation for gains accruing after that date, but companies do not. The full gain is added to the company's assessable income and taxed at the flat company rate. Depending on your circumstances and how long you hold the property, that can work for or against you. If you are considering this structure, speak to an accountant who understands investment property and company tax before you commit. We work with officers regularly who are weighing up personal versus company borrowing, and the tax outcome often decides which path makes sense.

What happens to LMI and deposit requirements

Lenders mortgage insurance is generally not available on loans to companies. If the LVR is above 80 per cent, most lenders will decline the application or require additional security, such as equity in another property held personally or by the company. Some lenders will go to 80 per cent LVR on a company loan without LMI if the director guarantees are strong and the rental income clearly services the debt, but anything above that typically requires cross-collateralisation with other assets.

That means you usually need a larger deposit when borrowing in a company name compared to a personal loan. For a property at an LVR of 80 per cent, you need at least 20 per cent deposit plus costs. Stamp duty, legal fees, and lender establishment costs are all payable by the company. Some states charge higher stamp duty rates for companies purchasing residential property, so check the rules in the state where you are buying. If you are looking at leveraging equity from your existing home to fund the deposit, you can read more about how that works in our guide to equity release loans for police officers.

Rate differences and loan features

Interest rates on company investment loans are usually higher than standard residential investment rates. The margin varies by lender, but you can expect to pay an additional 0.3 to 1.0 percentage points depending on the LVR, the strength of the company financials, and the level of director support. Some lenders do not offer discounts on company loans, while others will negotiate if you have multiple facilities or a strong relationship.

Loan features are generally more limited. Offset accounts may not be available, or they may be offered only as a separate business transaction account with offset functionality. Redraw can be restricted. Interest-only periods are commonly offered for investment loans in a company structure, often up to five years, and can be extended subject to lender review. If you are comparing options, ask about ongoing fees, annual review requirements, and whether the lender requires updated financials each year. We help officers compare investment loan options from lenders across Australia who will consider company structures, and we can often negotiate better terms than you would get going direct.

Guarantees and personal liability

Even though the loan is in the company name, directors almost always provide personal guarantees. That means if the company defaults, the lender can pursue you personally for the outstanding debt. The guarantee is usually unlimited, which means it covers the full loan amount plus interest, costs, and any shortfall if the property is sold and does not cover the debt.

Some lenders allow limited guarantees, which cap your personal exposure at a set amount or percentage of the loan. Those are less common and usually only offered where the company has substantial assets or revenue independent of the director. If you provide a guarantee, the lender will register a note of that guarantee, and it will appear when another lender conducts a credit check. It also counts toward your personal borrowing capacity when you apply for other credit, because you are contingently liable for the company debt. If you are planning to borrow again in your personal name soon after, factor that in.

When a company structure does not make sense

If you are buying your first investment property and you expect it to run at a loss for the first few years, borrowing personally usually makes more sense. You can offset the loss against your salary and reduce your tax each year under the current negative gearing rules, or under the grandfathered rules if you already own the property or buy a new build. A company structure quarantines that loss and gives you no immediate tax benefit.

If you want to access lender programs that waive LMI for police officers at higher LVRs, those programs apply to personal borrowing, not company loans. You can find out more about those in our LMI waivers for police officers guide. Similarly, if you want the option to refinance quickly or access offset and redraw without restrictions, a residential investment loan in your personal name will give you more flexibility and lower rates in most cases. We also cover refinancing options in detail in our guide to investment loan refinancing for police officers.

Company structures work when asset protection, tax planning at the company level, or a long-term portfolio growth strategy justify the higher cost and complexity. If those factors are not central to your plan, the standard residential investment loan will usually be the better option.

Switching from personal to company ownership or vice versa

If you already own an investment property in your personal name and want to transfer it into a company, that transfer is treated as a sale and purchase for tax and stamp duty purposes. You will trigger capital gains tax on any increase in value since you bought it, and the company will pay stamp duty on the purchase as if it were buying from a third party. Some states offer concessions or exemptions for transfers between related parties, but they are limited and do not usually apply to investment property transfers into a company.

Going the other way, transferring a property from a company into your personal name, triggers the same tax and duty. The company is treated as disposing of the asset, and you are treated as purchasing it. That makes switching structures expensive once the property is already held. If you are considering a company structure, make the decision before you exchange contracts, not after settlement.

If you are working rotating shifts and find it difficult to meet with accountants or brokers during standard business hours, we work around your roster. You can book a time that suits you, including evenings and weekends, and we will walk through the structure options, lender requirements, and tax implications before you commit to anything. Call one of our team or book an appointment at a time that works for you.

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