If you’re across SMSF property investment, you’ll want to know about a change taking effect on 10 August 2026.
From that date, SMSFs will no longer be able to enter into a new Limited Recourse Borrowing Arrangement (LRBA) to purchase residential investment property. An LRBA is a loan structure that lets an SMSF borrow to buy a single asset while limiting the lender’s claim to that asset alone.
This isn’t a proposal, it’s law. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026, and the new rules commence 10 August 2026.
Here’s what’s changing, what isn’t, and what it means for SMSF property strategy going forward.
What is an SMSF, and why does borrowing matter?
A Self-Managed Super Fund gives its members direct control over how their retirement savings are invested, rather than leaving those decisions to an industry or retail super fund. That control is one of the main reasons people set one up, including the ability to invest directly in property.
For many SMSF trustees, borrowing has been a key part of that strategy. It’s what’s made it possible to buy an investment property using a mix of the fund’s own capital and borrowed funds, rather than needing the full purchase price in cash.
That’s the piece that’s changing.
What’s changing from 10 August 2026?
From 10 August 2026, new LRBAs can no longer be used to purchase residential property. Borrowing will still be available for eligible business real property (commercial, industrial, and similar assets used wholly and exclusively in a business), but residential property is being carved out of new borrowing arrangements altogether.
In practical terms:
- New residential LRBAs will no longer be permitted from 10 August 2026 onward.
- Existing residential LRBAs are unaffected. If a fund already has one in place, it continues as-is.
- Contracts exchanged before 10 August 2026 are also protected under transitional rules, even if settlement happens afterwards.
- Commercial and business real property borrowing continues under the current rules.
The change affects how residential property can be financed through an SMSF, not whether an SMSF can own residential property at all.
What’s not changing?
It’s easy to read this and assume SMSFs can no longer invest in property. That’s not the case.
An SMSF can still:
- Buy residential investment property using funds already available in the fund (i.e. without borrowing).
- Continue holding any residential property already financed through an existing LRBA.
- Invest in business real property using borrowed funds.
- Build a diversified portfolio that includes property alongside other investments.
Property remains a legitimate part of an SMSF strategy. It’s specifically the ability to borrow for a new residential purchase that’s closing off.
Who does this affect?
This is most relevant for anyone who has been considering:
- Setting up an SMSF specifically to buy residential property using finance.
- Adding to an existing SMSF property portfolio through borrowing.
- Using an LRBA as part of a longer-term retirement or investment strategy.
For funds already holding residential property under an existing LRBA, nothing changes. For future purchases, borrowing is simply no longer part of the equation unless the contract is in place before 10 August.
Is an SMSF still worth considering?
For many, an SMSF remains an effective way to build long-term retirement wealth, the appeal has always been broader than just borrowing for residential property. Benefits like greater control over investment decisions, flexibility across asset types, and the ability to invest in business real property are unaffected by this change.
An SMSF isn’t the right fit for everyone, and that hasn’t changed either. It comes with real responsibility. Trustees need to maintain an investment strategy, arrange annual audits, lodge returns, and ensure the fund operates solely to provide retirement benefits. Whether an SMSF, and property within it, still makes sense for your goals is a conversation for your accountant or financial adviser.
Frequently asked questions
Can SMSFs still buy residential property after 10 August 2026? Yes. SMSFs can still purchase residential property using funds already in the fund. What’s changing is the ability to borrow for a new residential purchase.
What happens to an SMSF loan that already exists? Existing residential LRBAs aren’t affected by this change and can continue as they are.
What if a contract has already been signed? If the contract was exchanged before 10 August 2026, it’s protected under the transitional rules — even if settlement happens after that date.
Can SMSFs still borrow for commercial property? Yes. Borrowing for eligible business real property is unaffected by this change.
How Loan Lounge can help
Whether an SMSF is the right structure for your retirement strategy is a conversation for your accountant or adviser. But if you’re trying to understand how these changes affect the lending side, or what your options look like given the timing, we’re happy to talk it through alongside your other advisers.
Book a free a consultation with one of our brokers today.