The essential structure for Victorian property investors. Most investors acquire property in the wrong structure — removing critical future options. The MGS VIC Property Trust preserves your land tax threshold, unlocks SMSF co-investment, and enables stamp-duty-free ownership transfers.
The most important issue when investing in Victorian residential real estate is flexibility — specifically, what you can do with the property in the future. Most investors acquire property in the wrong structure and permanently remove critical future options.
Individual ownership, companies, partnerships, and discretionary trusts all fail in different ways. Only a unit trust preserves all four critical pathways that define a truly flexible property investment.
All four future pathways remain open — SMSF transfer, stamp-duty-free ownership change, debt refinancing, and land tax threshold — unavailable in any other single structure.
Property is held by the trustee, not the individual. Unitholders are protected from personal creditors while retaining the economic benefits of direct ownership.
The VIC Property Trust can issue ordinary and special units — suitable for joint ventures and minor development financing arrangements with third parties.
Unitholders may borrow in their own name to acquire units. Interest may be deductible while the trust provides structural benefits. From 2027–28, residential rental losses are quarantined to residential property income (pre-13 May 2026 interests grandfathered; new builds excepted) — seek advice on loss utilisation.
Each step below represents a strategy permanently foreclosed when property is acquired in the wrong structure. The VIC Property Trust preserves all six.
The ability to transfer a residential investment property to an SMSF is paramount — most investors see property as "providing for retirement." If held in an individual's name, discretionary trust, hybrid trust or company, the SIS Act prohibits the SMSF trustee from acquiring the asset. A unit trust acquired from an arm's length party allows the SMSF to acquire units once the trust is debt-free and assets are not used as security.
Transferring a property between family members or to a trust normally incurs ad valorem transfer duty. A unit trust changes this: if the property value is below $1 million, issuing units to a new entity and redeeming from the old one does not generally attract transfer duty. For example, redeeming individual units and issuing to an SMSF trustee on a $900,000 property: no duty applies. The landholder duty and anti-avoidance provisions must be considered in each case — specific advice is required before relying on this pathway.
Converting non-deductible personal debt (home loan) to deductible investment debt requires an equity position that is not direct ownership. When the trust trustee borrows to redeem units from a unitholder, the interest on that borrowing is deductible — a strategy confirmed in FCT v Roberts; Smith 92 ATC 4380. This pathway is closed to individual and company ownership.
The VIC Property Trust is not subject to the Land Tax Surcharge on Trusts when the trustee discloses unitholder identities. SRO Victoria issues secondary assessments to unitholders. Where the unitholder owns no other land, no assessment is issued. Unitholders who reside in the property may also qualify for a PPOR exemption in whole or part.
MGS recommends each property be held in its own VIC Property Trust. This maximises each property's access to a separate land tax threshold rather than an aggregated land value; enables CGT planning if one property is sold while others are retained; and allows targeted SMSF refinancing as specific properties become unencumbered over time.
If the unitholder has borrowed personally to negative gear, the SMSF may still invest provided the trust asset is not being used as security. Over time, other assets (e.g. the family home) can be used as security, and a salary sacrifice arrangement can reduce the debt at the concessional 15% SMSF tax rate — accelerating the pathway to SMSF ownership.
The table below shows which structures preserve the four critical investment pathways. Only the VIC Property Trust achieves all four.
| Structure | Land tax position (VIC) | Change owner without transfer duty | SMSF Can Acquire | Refinance to Deductible |
|---|---|---|---|---|
| VIC Property TrustRECOMMENDED | Threshold preserved — trustee discloses unitholders; SRO Victoria issues secondary assessments as if owned personally | Yes — issue/redeem units; generally no transfer duty under $1M value ¹ | ✓ ² | ✓ |
| Company | Threshold applies — company assessed as owner at general rates | No — share transfers don't move land; landholder duty on significant interests | ✓ ² | ✗ |
| Individual | Threshold applies — standard individual assessment | No — full ad valorem duty on any transfer | ✗ ³ | ✗ |
| Partnership | Threshold applies — partners assessed on their interests | No — duty on changes in partnership property interests | ✗ ³ | ✗ |
| Hybrid Unit Trust | Special trust surcharge risk — depends on deed and unitholder disclosure; specific advice required | Yes — unit mechanisms available, subject to the same $1M / landholder limits ¹ | ✗ ³ | ✓ |
| Discretionary Trust | Trust surcharge rates from $25,000 — no general threshold; PPR and other exclusions aside | No units to issue or redeem — beneficial interests change via trustee/appointor mechanisms; duty analysis differs ⁴ | ✗ ³ | ✗ |
Each MGS VIC Property Trust is prepared by Macquarie Group Services and includes everything required to establish the trust, comply with VIC land tax disclosure requirements, and administer the trust on an ongoing basis.
MGS recommends establishing a separate trust for each investment property — maximising land tax threshold access and preserving individual CGT and SMSF strategies for each asset.
Specific land tax and structuring advice should be sought from a qualified VIC land tax specialist.
A standard unit trust is classified as a “special trust” under the Land Tax Act 2005. Land held by a special trust attracts a surcharge rate with no threshold deduction — meaning land tax applies from dollar one. The VIC Property Trust is structured so that the trustee can disclose the identity of unitholders to SRO Victoria, which triggers secondary assessments against the individual unitholders rather than the trust itself. This preserves each unitholder's individual threshold.
Provided the trust asset (the property) is not being used as security for the personal borrowing, the SMSF may invest. Over time, other assets — such as the family home — can be substituted as security for the personal borrowing. A salary sacrifice arrangement can then be used to accelerate debt repayment at the concessional 15% super tax rate, making the path to SMSF ownership faster and more tax efficient.
Technically yes — but MGS strongly recommends against it. Holding multiple properties in a single trust means: (a) land values are aggregated, reducing threshold access; (b) if one property is sold, the CGT gain realised may affect the retained property; (c) SMSF unit acquisition requires the trust to be debt-free on all assets, making it harder to achieve on a per-property basis; and (d) stamp duty savings on ownership change are harder to manage across pooled assets. One trust per property is the optimal structure.
Transferring an existing property into a trust structure can trigger CGT and stamp duty. The trust structure is most beneficial when established before the property is purchased. If you already own a property individually and wish to restructure, you must obtain specific advice on the CGT, stamp duty and land tax consequences before taking any action. Contact MGS for a consultation — in some circumstances the restructure is still beneficial, particularly where the future SMSF or refinancing strategy justifies the immediate costs.
Yes — unlike the NSW Land Tax Unit Trust (which is limited to a single class), the VIC Property Trust is capable of issuing both ordinary and special units with entitlements determined by the trustee. This may be used for introducing third parties who join the unitholders in special financing arrangements in minor developments. Note that SMSF investment must satisfy SIS Act requirements regardless of unit class.
No. Unitholders who reside in the trust property may be eligible for a PPOR (principal place of residence) exemption in whole or in part under VIC land tax legislation. The specific conditions for the exemption should be confirmed with a qualified VIC land tax specialist, as the rules for trust-held properties may differ from those for individually-held properties.
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