Quick answer: only if the property is business real property. Since 10 August 2026, a self-managed super fund (SMSF) can only use a new limited recourse borrowing arrangement (LRBA) to buy real property if that property is business real property, meaning land and buildings used wholly and exclusively in a business. Whether a residential investment property meets that test depends on how it is used, and your accountant or SMSF adviser should confirm it before you sign anything. Existing residential LRBAs continue, a binding purchase contract exchanged before 10 August is unaffected, and a fund can still buy residential property with cash it already holds.
Current as at October 2026.
For a new loan on a house or unit, the answer is generally no. The rest of this article explains the change, the exceptions and what still works.
What changed on 10 August 2026
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026. It changes the rules for LRBAs held by SMSFs. The new rules apply to LRBAs entered into on or after 10 August 2026, and under them an LRBA can only be used to acquire real property if the property is business real property.
LRBAs are not banned. The ATO says the change applies to all lenders, whether a bank, a non-bank lender or a related party. The lender’s identity doesn’t decide whether the property has to be business real property.
Business real property generally means land and buildings used wholly and exclusively in a business. The property has to meet that test when the LRBA is entered into, and it has to stay business real property for the entire life of the loan. If it stops being used wholly and exclusively in a business while the loan is still running, it no longer qualifies as business real property and the fund breaches the rules, and resuming business use later doesn’t undo that breach.
If a property doesn’t meet that test, a new LRBA can’t be used to buy it.
What’s still possible
Refinancing an existing residential LRBA
If your fund already has an LRBA on a house or unit that was entered into before 10 August 2026, the change doesn’t affect it. Refinancing that loan is also unaffected. The ATO treats refinancing as entering a new loan contract for the same asset, with the same lender or a new one.
An older SMSF loan may have been set up years ago, so it’s worth reviewing its terms before you decide. Check what the existing loan costs, and what a new loan would cost, before you act. Your adviser and accountant should be part of that conversation.
Buying residential property with cash
A fund can still invest in residential real property that isn’t business real property, provided it meets all the other regulatory rules. It just can’t be financed under a new LRBA.
Buying business real property
Business real property is the one kind of real estate an LRBA can still buy. It means land and buildings used wholly and exclusively in a business, so the test looks at how the property is used, not only what kind of building it is. The fund can buy it from a related party, but only if the price reflects the market value.
Business real property is also an exception to the in-house asset and related party acquisition rules. That doesn’t remove the other rules. The ATO’s guidance on SMSF investment restrictions says no one associated with the fund should get a present-day benefit from its investments, so the fund’s dealings with business premises still need careful planning.
Contracts exchanged before 10 August
A binding contract to buy real property exchanged before 10 August 2026 is unaffected. That holds even if the contract settles, or the LRBA is entered into, after that date.
If you’re in this position, talk to an SMSF lending specialist about where your fund stands.
Who decides whether an SMSF should buy property?
We don’t advise on whether an SMSF should own property, or whether a particular property belongs in it. That is the job of a licensed financial adviser and your accountant. What we do is the lending: working out which lenders will look at a fund and an asset, and how to take the application through to settlement alongside your adviser and accountant.
Our self-managed super funds service page sets out our SMSF lending service. For the longer version, read our full guide to SMSF property investment, and our SMSF loans explained post covers the structure of an LRBA after the change.
Frequently asked questions: SMSF borrowing after 10 August 2026
Can an SMSF still borrow to buy a house?
Only if the property is business real property. A new LRBA entered into on or after 10 August 2026 can only be used to buy business real property, unless the binding contract was exchanged before that date. Existing residential LRBAs continue, and they can be refinanced.
Can an SMSF still borrow to buy commercial property?
Yes, if the property is business real property. That means land and buildings used wholly and exclusively in a business.
Does the change apply if the loan comes from a bank?
Yes. The ATO says the change applies to all lenders, whether a bank, a non-bank lender or a related party.
What if we signed a contract before 10 August?
A binding contract exchanged before 10 August 2026 is unaffected, even if settlement or the loan comes later.
Can we refinance an existing SMSF loan on a house?
Yes. The ATO treats refinancing as a new loan contract for the same asset, with the same lender or a new one.
If your fund has an LRBA taken out before August, talk to an SMSF lending specialist to see whether a refinance makes sense.
This is general information only. It doesn’t take your objectives, financial situation or needs into account and isn’t financial, tax or legal advice. Whether an SMSF, or any property within one, suits you is a matter for a licensed financial adviser and your accountant. Loan Lounge, ACL 515608.
Sources
- Australian Taxation Office, “Changes to LRBAs for property from 10 August”, last updated 29 July 2026: https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/self-managed-super-funds-smsf/smsf-newsroom/changes-to-lrbas-for-property-from-10-august
- Australian Taxation Office, “Changes to limited recourse borrowing arrangements”, last updated 26 October 2026.
- Australian Taxation Office, “What are the SMSF investment restrictions?”, last updated 16 September 2025.
- Federal Register of Legislation, “Treasury Laws Amendment (Tax Reform No. 1) Act 2026”: https://www.legislation.gov.au/C2026A00049/asmade