Restructuring Income for a $3M Investment

The Borrower

Client — “Tom”

High-income medical professional

Income

~$1M/year

Portfolio

~10 properties, incl. trust-held

The Objective

Acquire a ~$3M Victorian investment through a new trust, separate from the trust holding the existing portfolio.

The Challenge

The prior year, practice income had been distributed into the existing property trust to offset its investment losses — sound for tax, but it tied the borrowing income to that trust. Once the lender needed the trust’s returns, all its liabilities became relevant and borrowing capacity fell sharply.

What Was In the Way

A standard two-year assessment would drag FY24 back in, exposing the same problematic structure and dragging capacity down further.

What We Identified

Keeping FY25 income in the company — and finding a lender that could work off one-year financials — would present a clean borrowing position.

The Solution

• For FY25, kept income within the company rather than routing it through the investment trust — accepting more company tax for a cleaner lending position.
• Placed the deal with Pepper, which could use the one-year financials and treat the other trust liabilities appropriately.
• Refinanced the owner-occupied property to release ~$200,000–$300,000 of equity toward the deposit.

Working With the Accountant

A joint session with the client and their accountant weighed the tax rationale for the old structure against its effect on borrowing capacity. Changing how FY25 income was handled traded a little more company tax for the ability to fund the next ~$3M acquisition — tax and lending objectives balanced together, with tax outcomes remaining a matter for the client’s adviser.

The Result

Some lenders would have supported only ~$1M–$1.5M; the restructure and lender choice carried the full requirement. The timeframe reflected the long settlement and waiting on FY25 returns, not loan processing.

What Happens Next

The portfolio continues to grow, with income presentation and structure reviewed alongside the client’s accountant ahead of each new acquisition.

Why It Matters

The obstacle is rarely earning capacity — it’s how income and existing trust liabilities present to lenders.