Borrow against your property or sell it?

A business that needs cash and owns real estate usually has two levers: sell a property, or borrow against it. Selling feels clean, with no new debt and no interest. Borrowing feels faster. Both instincts are right, and both can be wrong. The best choice depends on timing, tax, what the property is doing for you and whether the cash need is temporary or permanent.

What is the core trade-off between borrowing and selling?

Borrowing keeps the property and turns some of its equity into cash, quickly. You pay interest and loan costs while the debt runs, and you need a clear way to repay it.

Selling turns all of the equity into cash and ends the holding costs. It takes longer, it can trigger tax, and you lose whatever future growth or income the property would have delivered.

A useful way to think about it: borrowing buys time, selling buys certainty. The question is which one your business is short of.

How do borrowing and selling compare side by side?

Factor	Borrow against the property	Sell the property
Time to cash	Funding possible within 24–48 hours once documents are in; $20k–$250k possible same day	Weeks to market and sell, then the settlement period in the contract
Amount released	A portion of the equity	All of the equity, less selling costs and tax
You keep the asset?	Yes, with its income and any growth	No
Tax on the way out	No CGT event from borrowing	Possible capital gains tax; contract date is the CGT event
Ongoing cost	Interest and loan costs; prepaid or capitalised interest possible	Selling costs once, then none
Holding costs	Continue (council charges, insurance, land tax where it applies)	Stop at settlement
Risk	The debt must be repaid by a dated exit	A rushed sale can mean a lower price
Flexibility later	Sell later, on your terms, and repay	Buying back in means paying transfer duty again

How fast is each option, really?

Selling rarely moves as fast as people hope. There’s the campaign, the negotiation, the contract and then the settlement period. Add the paperwork every seller now needs. For contracts signed from 1 January 2025, the ATO expects Australian residents selling Australian real property to give the buyer a clearance certificate, whatever the price, apart from a few exempt situations. Without it, the buyer must withhold 15 cents in every dollar and send it to the ATO. The ATO says applications can take up to 28 days, so it suggests lodging at least 28 days before settlement. A certificate is free and valid for 12 months.

Borrowing is quicker because there’s no buyer to find. A private lender assesses the property itself, with no formal valuation required, so there’s no third-party report to wait on either. Once documents are in, funding is possible within 24–48 hours for up to $5m.

What tax does selling trigger that borrowing doesn’t?

Borrowing against a property isn’t a CGT event. Selling usually is. A few ATO points shape the decision:

• The contract date counts. The ATO says that for a sale under a contract, the CGT event happens when you enter the contract, not at settlement. Signing in late June versus early July can move the gain into a different income year.
• The 12-month rule. Individuals and Australian trusts that hold an asset for at least 12 months can reduce a capital gain by half. Complying super funds get a one-third reduction.
• Companies miss out. The ATO is clear that companies can’t use the CGT discount. If a company owns the property, a sale can carry a heavier tax bill than many owners expect.
• Business premises may qualify for more. The ATO notes that small business entities selling their business premises may be able to reduce the gain using the small business CGT concessions.
• Commercial property and GST. Selling commercial premises is generally a taxable sale for GST unless the deal qualifies as a going concern, which is GST-free.

None of this means borrowing is better for tax. It means a sale’s true net proceeds can be well below the sale price, and the timing of a sale can matter. Your accountant is the right person to run the figures.

When does borrowing against the property make more sense?

Choose to borrow if:

• The need is temporary and has an end date: a contract payment, an ATO debt that needs clearing, a stock order before peak season.
• You’d rather choose when to sell, for example after a lease renewal, a renovation or a stronger market, so you’re not discounting under pressure.
• A sale now would crystallise a large capital gain, and you’d rather plan the timing with your accountant.
• The property earns well or is a long-term keeper.
• Cash flow can’t carry repayments right now, so prepaid or capitalised interest lets you wait for the exit without monthly payments.

Our equity release for business page covers the mechanics, and release equity from an investment property walks through a rental property in detail.

When is selling the smarter move?

Be honest about these. Choose to sell if:

• You’d sell within the year anyway, the market is steady or soft, and there’s nothing to gain by waiting.
• The business need is permanent. Short-term borrowing for a structural shortfall just adds cost.
• The property drains cash, with low rent, vacancy or heavy holding costs.
• The gain is small or the CGT discount already applies, so the tax cost of selling is modest.
• You don’t have a credible exit for a loan other than the sale itself, and you can wait for a sale to complete.

Can you do both: borrow now and sell later?

Often that’s the best of both. You borrow against the property, or another one, to meet today’s need, then sell properly over the following months and repay from the proceeds. The lender’s exit is the sale, so the term is set to fit a realistic campaign and settlement, with a buffer. Our page on bridging until a property sells explains how lenders judge a sale-based exit, and the exit strategy guide shows what evidence helps.

What does the decision look like with real numbers?

Illustrative example: a Melbourne printing company needs $350k within a fortnight to buy a second press for a two-year contract that starts next month. The director personally owns an investment townhouse worth around $1.1m with $400k owing, bought eight years ago. A rushed sale might settle in ten to twelve weeks, too late for the contract. Illustrative: a $350k second mortgage over the townhouse funds the press within days, with interest capitalised. The director lists the townhouse in spring, signs a contract in October and repays the loan at settlement from the proceeds, having had time to plan the CGT position with the accountant and to sell without a deadline hanging over the price.

Change the facts and the answer flips. If the business needed the $350k permanently, and the townhouse was going to be sold within months anyway, selling first and skipping the loan would likely be cheaper.

What if the property is owned by a company or trust?

Ownership changes both sides of the decision. On the sale side, it affects who pays the CGT and whether the discount applies. On the borrowing side, the company signs through its directors, or the trustee signs if the trust deed allows it to borrow and give security. Our page on company or trust owned property covers what the lender will ask for.

What does each option cost, without quoting a price?

• Borrowing: interest for the days the money is used, priced on the security, LVR, term and exit; a small assessment fee shown on the Letter of Offer; legal, registration and discharge costs.
• Selling: agent’s commission and marketing, legal and conveyancing fees, possible CGT, any price you give away by selling quickly, and transfer duty later if you buy back into property. Revenue NSW, for example, confirms the purchaser pays the duty.

The secured borrowing power calculator shows how much equity you could use before you decide. When you’re ready, see what you could borrow against the property instead of selling it.

Rather keep the property? See if you qualify

If borrowing now and selling later (or not at all) fits your plans, tell us about the property, what’s owing on it, the amount and the exit. A specialist reads every enquiry personally and will say so if selling looks like the better path.

There’s no credit check when you enquire, and your details aren’t spread across a pile of lenders. Give accurate figures for the property and its debts, since that’s what produces a dependable first answer.

Start a 60-second enquiry to see what the property can do for your business.