Top 10 Ways to Borrow in a Company for Investment Property

Borrowing through a company for investment property creates a different lending and tax environment than borrowing in your personal name.

The structure you choose affects which lenders will consider your application, how they assess your income, the rate you pay, and whether you can access tax concessions under the new rules that start in July 2027. For endodontists operating via a practice entity or holding company, the decision often hinges on asset protection, flexibility in profit distribution, and how you plan to manage the tax changes that quarantine negative gearing for most residential investments acquired after May 2026.

Why Endodontists Consider Borrowing in a Company Name

Corporate borrowing suits practitioners who want to separate investment assets from personal liability or who operate their practice through a company already. A company can borrow, hold property and receive rental income as a separate legal person. That separation can protect your personal assets from claims related to the investment, though lenders usually require personal guarantees from directors, which reduces that protection in the context of loan default.

The structure also gives you control over how rental income and capital gains are distributed, particularly if the company acts as trustee for a discretionary trust. In our experience, endodontists with income that varies year to year appreciate the ability to direct profits to family members on lower marginal rates, though this requires careful tax planning and becomes more complex under the new negative gearing quarantine rules.

How Lenders Assess Company Loan Applications

Lenders treat company borrowers differently than individuals. Most require directors to provide personal guarantees, full financials for the company, and evidence of the company's trading history. If the company is newly incorporated or holds no assets other than the property being purchased, the lender will assess your personal income and liabilities as though you were borrowing personally, then structure the loan in the company name with you as guarantor.

For an established company with retained earnings or ongoing business income, some lenders will assess serviceability based on the company's profit and loss statements and tax returns. The serviceability buffer still applies, currently three percentage points above the product rate, and the debt-to-income cap introduced in February 2026 applies to company borrowers in the same way as individuals when personal guarantees are required. That cap limits lending at six times income or more to 20 per cent of a lender's new investor loan flow.

Company Tax Rate Versus Personal Marginal Rates

Companies pay a flat 25 per cent tax rate if they qualify as a base rate entity, or 30 per cent otherwise. Base rate entity status requires that no more than 80 per cent of assessable income is passive income such as rent, interest or dividends. A company holding only residential investment property will not qualify, so it pays tax at 30 per cent on all rental profit.

For an endodontist on the top marginal rate of 45 per cent plus the Medicare levy, a 30 per cent company rate looks attractive. But that comparison ignores franking credits and the cost of extracting profit from the company. Dividends paid to you are taxed again in your personal hands, minus any franking credits attached. If the company pays 30 per cent tax and you pay another 15 per cent on the dividend after franking, the combined rate is 45 per cent anyway. If the property makes a loss, the company can only carry that loss forward to offset its own future income, whereas an individual can offset the loss against salary until July 2027 if the property was acquired before the grandfathering date.

Negative Gearing Quarantine and Company Structures

From 1 July 2027, rental losses from residential dwellings acquired on or after 7:30pm AEST on 12 May 2026 cannot be offset against salary or non-residential income. Losses must be quarantined and offset only against residential rental income or carried forward. The quarantine applies to individuals, companies, trusts and partnerships, with specific carve-outs for widely held unit trusts and certain affordable housing arrangements.

If a company borrows to buy an established dwelling after the grandfathering date, any rental loss is trapped inside the company. It cannot reduce your personal tax. The company can carry the loss forward to offset future rental profit from that property or other residential investments, or offset it against a capital gain when the property is sold. That changes the cash flow equation. Consider an endodontist whose company borrows $600,000 at a variable rate to buy an established unit generating $550 per week in rent. Interest might cost $2,900 per month, and rent covers $2,380. The $520 monthly shortfall plus other property costs create a loss that can only be used by the company, and the company must fund the shortfall from retained earnings or director loans. The tax benefit is deferred until the property turns cashflow positive or is sold.

Eligible New Builds and Continued Access to Negative Gearing

The negative gearing quarantine does not apply to eligible new residential dwellings. These are dwellings constructed on previously vacant land, or dwellings that replace existing properties where the total number of dwellings increases. A knock-down rebuild that replaces one house with one house does not qualify. A new build occupied for more than 12 months before being sold to an investor loses the exemption for that subsequent purchaser.

If a company borrows to buy an eligible new build, rental losses can be offset against the company's other income, including any trading income if the company also operates your practice. That means an endodontist whose company earns consulting fees or specialist treatment income can shelter some of that income with the rental loss, subject to the base rate entity passive income rules. The new build exemption also preserves access to the 50 per cent capital gains tax discount for individuals, though companies never received that discount anyway. Companies can choose between indexation of the cost base and the 30 per cent minimum tax on real gains when disposing of eligible new builds acquired after 1 July 2027.

Lenders That Accept Company Borrowers for Investment Property

Not all lenders offer investment loans for dentists in a company name. The major banks generally do, provided the company has an Australian Business Number, is registered for GST if turnover exceeds the threshold, and has at least two years of trading history or sufficient assets. Non-bank lenders vary. Some accept company borrowers with strong director guarantees, while others lend only to individuals.

Interest rates for company borrowers are often slightly higher than for personal borrowers, typically 10 to 30 basis points, because the lender views the structure as adding complexity and risk. Some lenders waive Lenders Mortgage Insurance for medical and dental professionals borrowing personally at loan to value ratios up to 90 per cent, but those LMI waivers for dentists do not always extend to company borrowers. If your loan to value ratio exceeds 80 per cent and the lender does not waive LMI for companies, you will pay a premium that can reach several thousand dollars.

Asset Protection and Personal Guarantees

Borrowing in a company name provides limited asset protection if you sign a personal guarantee, which almost every lender requires. The guarantee makes you personally liable for the debt if the company defaults. The property itself is usually held separately from your home and other personal assets, which can be useful if the investment property faces a liability claim such as an injury on the premises, but that protection does not extend to loan default.

If asset protection is your primary reason for using a company, consider whether a discretionary trust with a corporate trustee achieves the same goal with more flexibility. The trust holds the property, the corporate trustee borrows as trustee, and you guarantee the loan. The trust structure allows income to be distributed to beneficiaries on lower marginal rates, though the negative gearing quarantine applies equally to trusts and companies.

How to Structure the Application for a Smooth Approval

Applications in a company name require more documentation than personal applications. Expect to provide the company's trust deed if it acts as trustee, the last two years of company tax returns, profit and loss statements, balance sheets, and details of all directors and shareholders. If the company is newly incorporated, lenders rely on personal financials and treat the application as though you are borrowing personally but settling in the company name.

Some lenders want evidence that the company has genuine business purpose beyond holding the investment property. Others accept special purpose investment companies provided the directors have sufficient personal income to service the loan. Preparing the paperwork in advance shortens the approval timeline. The rental appraisal for the investment property should be current, ideally within 90 days, and should reflect realistic vacancy assumptions for the area.

Interest Only Repayments and Cash Flow Management

Most company borrowers choose interest only loans for dentists to maximise deductible interest and preserve cash flow. An interest only period typically runs for one to five years, after which the loan reverts to principal and interest unless you negotiate an extension. The monthly repayment on a $500,000 loan at a variable rate of around 6.3 per cent is approximately $2,625 interest only, compared to $3,350 principal and interest over 30 years.

From a tax perspective, interest only repayments mean the full repayment is deductible, subject to the negative gearing quarantine if applicable. Principal repayments are not deductible because they reduce the loan balance rather than funding the income-producing activity. For a company with limited cash reserves, interest only repayments reduce the monthly outflow and the need for directors to inject capital via director loans.

Refinancing Company Investment Loans After Rate Changes

Company borrowers face the same refinancing considerations as individuals when fixed rates expire or when a better rate becomes available elsewhere. If your company took out a fixed rate loan before recent rate rises, the fixed period may be ending soon. Refinancing to a lower variable rate or a new fixed term can reduce repayments, but investment loan refinancing for dentists in a company name involves re-lodging all company financials and re-executing guarantees.

Some lenders offer rate discounts for existing customers who threaten to refinance. Others do not negotiate. Moving to a new lender can also trigger discharge fees, application fees and valuation costs. If your current loan has a redraw facility or offset account and the new lender does not offer those features for company loans, the convenience cost may outweigh the rate saving. Offset accounts are particularly useful for companies with variable income, as surplus funds can sit in the offset and reduce interest without being locked into the loan.

Call one of our team or book an appointment at a time that works for you. We work with endodontists across Australia to structure investment property finance that aligns with your clinical workload, profit distribution plans and the tax changes coming into force in 2027.

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