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As at July 2026, SMSF borrowing rules have changed in a way that matters to any trustee thinking about property. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026, and from 10 August 2026 — 45 days after assent — self-managed super funds can generally no longer enter new limited recourse borrowing arrangements (LRBAs) to acquire residential property. That is a genuine turning point for SMSF lending, but it is also narrower than some of the coverage suggests. This article explains what has changed, what has not, and what it means in practice for trustees. It is general information only — not financial, legal or tax advice — and rules can change, so confirm the current position with the ATO and a licensed financial adviser before acting on any of it.
Superannuation law generally prohibits SMSFs from borrowing. The limited recourse borrowing arrangement is the legislated exception: the fund borrows to help buy a single acquirable asset, the asset is held in a separate holding trust (often called a bare trust) until the loan is repaid, and the lender's recourse is limited to that one asset. Our SMSF loan guide walks through the structure in detail.
The new Act closes that exception for one asset class. From 10 August 2026, an SMSF generally cannot enter a new LRBA to acquire residential property. The change targets the borrowing, not the asset: it is the combination of a new loan and a residential purchase that is banned. The legislation is only weeks old as at July 2026, and fine-grained questions — such as how arrangements already in progress at the commencement date are treated — are matters for specific legal advice and for official guidance from the ATO, not for a general article.
For all the attention the ban has received, the list of things it does not touch is longer:
The window between now and 10 August 2026 is short, and that is precisely why caution matters more than speed. Moneysmart has long warned about property spruikers and one-stop-shop operators pressuring people into SMSF property purchases, and a legislated deadline is exactly the kind of urgency that pressure selling feeds on. A property purchase inside super carries decades of consequences; rushing one through to beat a commencement date is rarely how good retirement outcomes are made.
If borrowing for residential property was part of your fund's plan, the realistic paths from here are worth discussing with your adviser:
What the deadline should not produce is a hurried purchase of a property the fund would not otherwise have chosen.
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For business owners in particular, the commercial pathway continues as before. A commercial property that qualifies as business real property — premises used wholly and exclusively in a business — can generally be acquired from a related party and leased back to a member's business, provided everything runs on arm's-length terms at market rent. Residential property enjoys no such exception: members and related parties cannot live in or rent the fund's residential property at any price.
On the finance side, expect SMSF commercial lending to remain a specialist market:
Our SMSF loans page and commercial loans page explain how we help on the finance side, and our commercial property guide covers how lenders assess the security itself.
Whether the plan is a commercial borrowing or a residential cash purchase, the questions that matter have not changed:
That last question matters. Moneysmart specifically cautions against one-stop shops where the advice, the property and the loan all come from related businesses.
Treat professional advice as a requirement, not an option. A licensed financial adviser should confirm the strategy suits your retirement position — including whether property inside super fits at all. An accountant or SMSF specialist should handle the structure, compliance and audit settings. A solicitor should manage the holding trust documentation and the contract in the correct names and sequence. The ATO publishes trustee guidance and will be the authoritative source on how the new law applies, and Moneysmart sets out the risks in plain language. Nothing on this page is personal advice; it is general information current as at July 2026, and the details can change.
If the change has left your fund's plans uncertain, we can explain what lenders are doing in response, which commercial options remain open, and what deposits and liquidity the active lenders expect. Get in touch and we will walk through the finance side with you. Remember that any SMSF decision also needs licensed financial advice — a broker arranges the loan; your adviser confirms the strategy.
Generally not under new arrangements from 10 August 2026. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026, which received Royal Assent on 26 June 2026, bans SMSFs from entering new limited recourse borrowing arrangements to acquire residential property from that date. Existing residential LRBAs are grandfathered and commercial borrowing is unaffected. The law is new, so confirm the current position with the ATO and your licensed adviser.
Existing residential LRBAs are grandfathered, so a fund already holding residential property under a compliant arrangement can generally continue repaying the loan as before. Questions at the edges — such as varying or refinancing an existing arrangement — should be put to the ATO's guidance and your own advisers before you act, because the details of the new law are still settling as at July 2026.
Generally yes. The 2026 change bans new borrowing arrangements for residential property, not residential ownership itself. An outright purchase must still satisfy the usual rules: the sole purpose test, a documented investment strategy that supports it, no purchase from a related party, and no member or relative living in or renting the property at any price.
Yes — commercial LRBAs are untouched by the 2026 changes. Expect specialist settings: deposits commonly around 20-40% depending on the asset, evidence of fund liquidity after settlement, a smaller panel of lenders, and personal guarantees from members. Business real property can generally be leased to a member's business at market rent on arm's-length terms.
That is a question for a licensed financial adviser, not for a deadline. Moneysmart warns about pressure selling around SMSF property, and a legislated cut-off is exactly the urgency that pressure tactics exploit. A purchase inside super has consequences that run for decades; if the property only makes sense because of the deadline, that is usually a sign it does not make sense.
This article is general information only and doesn't consider your personal objectives, financial situation or needs — it isn't personal credit advice, and lending criteria, rates, fees and government schemes change. Before acting, speak with a licensed MakeMyLoan broker or credit representative who will assess your circumstances and provide a credit guide before any credit assistance is given.
