From 10 August 2026, SMSFs generally cannot borrow under a Limited Recourse Borrowing Arrangement (LRBA) to acquire residential property. The changes do not stop SMSFs from owning residential property, but they do restrict the ability to borrow to acquire residential property.
SMSFs may still proceed with residential property borrowing where the trustee exchanged or signed a contract of sale before 10 August 2026. Settlement may occur after this date. SMSFs can also continue to borrow under an LRBA to acquire eligible business real property, including commercial, industrial and mixed-use properties used wholly and exclusively in one or more businesses.
| Issue | Before 10 August 2026 | From 10 August 2026 |
|---|---|---|
| Borrow to buy residential property | Yes — generally permitted under an LRBA | No — generally no longer permitted |
| Residential contract signed before 10 August 2026 | May proceed | May qualify under transitional rules |
| Settlement after 10 August 2026 | Permitted | Permitted if transitional rules apply |
| Borrow to buy commercial property | Yes — where rules are satisfied | Yes — where rules are satisfied |
| Buy residential property without borrowing | Yes — where rules are satisfied | Yes — where rules are satisfied |
Prior to 10 August 2026, SMSFs could generally borrow under an LRBA to acquire both residential and commercial property, provided the arrangement satisfied the superannuation law requirements.
From 10 August 2026, SMSFs generally cannot enter into a new LRBA to acquire residential property. This means trustees who have not already signed or exchanged a residential property contract before the deadline will generally be unable to use SMSF borrowing to complete a new residential property purchase.
Importantly, the restriction applies to borrowing. It does not mean SMSFs are prohibited from owning residential property. An SMSF may still acquire residential property using existing fund cash, provided the investment complies with the fund's investment strategy, the sole purpose test and all other relevant superannuation rules.
The transitional rules are important for trustees who were already committed to a residential property purchase before the new rules commenced.
An SMSF may still be able to proceed with residential property borrowing where:
Settlement does not need to occur before 10 August 2026. If the contract was exchanged or signed before the deadline, settlement may occur after that date.
Yes. SMSFs can still own residential property. The new rules restrict borrowing to acquire residential property; they do not ban residential property ownership by SMSFs.
Your SMSF may still acquire residential property where:
Yes. SMSFs can continue to borrow under an LRBA to acquire eligible business real property. This includes many commercial, industrial and mixed-use properties that are used wholly and exclusively in one or more businesses.
Examples may include:
| Property Type | Can the SMSF Own It? | Can the SMSF Borrow to Buy It? |
|---|---|---|
| Residential property | Yes, subject to the usual SMSF rules | Generally no, unless transitional rules apply |
| Commercial property | Yes, subject to the usual SMSF rules | Yes, where the LRBA rules are satisfied |
| Industrial property | Yes, subject to the usual SMSF rules | Yes, where the LRBA rules are satisfied |
| Mixed-use property | Depends on the use of the property | May be possible if it qualifies as business real property |
Business real property generally refers to land and buildings used wholly and exclusively in one or more businesses. Whether a property qualifies as business real property depends on the facts and circumstances of the particular property and how it is used.
This distinction is important because borrowing for eligible business real property remains available under an LRBA, provided all legal and lender requirements are met.
If your SMSF already owns residential property under an existing compliant LRBA, the new rules do not mean that the arrangement must automatically be unwound.
However, trustees should continue to ensure the arrangement remains compliant, including:
Just Superfund continues to assist clients with SMSF property transactions, particularly commercial property acquisitions and residential transactions that qualify under the transitional rules.
Yes. SMSFs can still acquire residential property. The new rules restrict borrowing under an LRBA to acquire residential property. They do not ban SMSFs from owning residential property.
Generally no. From 10 August 2026, SMSFs generally cannot enter into a new LRBA to acquire residential property unless the transitional rules apply.
The transitional rules may allow a residential property LRBA to proceed where the trustee exchanged or signed a contract of sale before 10 August 2026.
Yes. Settlement may occur after 10 August 2026 if the residential property contract was exchanged or signed before the deadline and the arrangement otherwise satisfies the rules.
Yes. An SMSF may still buy residential property using existing fund cash, provided the purchase complies with the usual SMSF rules.
Yes. Borrowing remains available for eligible business real property, including many commercial, industrial and mixed-use properties used wholly and exclusively in one or more businesses.
Yes. Where an SMSF borrows under an LRBA to acquire commercial property, a bare trust is generally required. You can learn more on our SMSF Bare Trust page.
In many cases, yes. Business real property may be leased to a related business where the lease is on commercial terms and all superannuation law requirements are satisfied.
Existing compliant arrangements are generally not required to be unwound simply because of the new rules. However, trustees must ensure the arrangement continues to comply with all SMSF and LRBA requirements.
You should obtain advice before signing any property contract involving an SMSF. The correct purchaser, bare trust structure, loan documentation and timing can be critical.
SMSF property transactions can be complex, especially where borrowing, bare trusts and legislative changes are involved. If you are considering purchasing commercial property through your SMSF, or you need assistance with a residential property transaction that may qualify under the transitional rules, Just Superfund can help.
