SMSFs can no longer borrow to buy residential property.
The SMSF LRBA changes taking effect in 2026 are narrow but absolute: from 10 August 2026 a self-managed super fund cannot enter a new limited recourse borrowing arrangement to acquire residential property. Commercial LRBAs are untouched, and existing residential loans are grandfathered. This page sets out what changed, what did not, and what the options are now.
- Effective
- 10 August 2026
- Banned
- New residential LRBAs
- Unaffected
- Commercial LRBAs
- Existing loans
- Grandfathered
What changed in the 2026 LRBA rules.
One sentence: new residential borrowing inside super is gone; everything else stands.
- · New LRBAs to buy residential property
- · Increasing the principal on an existing residential LRBA
- · Gearing a residential purchase inside super, in any form
- · Commercial property LRBAs, in full
- · Existing residential LRBAs, to natural completion
- · Refinancing a residential LRBA at the same principal
- · Buying residential property outright with fund cash
The change is a policy pivot rather than a technical tidy-up. Since 2007 the LRBA has been the mechanism that let people combine the tax treatment of superannuation with direct, geared property ownership. Removing it for residential purchases ends that combination for anyone who has not already started.
The practical urgency sits with two groups. Trustees part-way through a residential purchase need to know whether their arrangement was entered in time. Trustees with an existing loan need to know that refinancing is still open to them but only at the same principal — and that this is the detail most likely to be got wrong, because a routine cash-out refinance is exactly what would breach it.
For business owners the picture barely moves. Commercial SMSF property remains one of the more effective structures available: the fund buys the premises, the operating business pays rent to the fund, and that rent builds the member's retirement balance instead of a landlord's.
Common questions.
Direct answers. If your situation is close to a line, get it checked before you act.
Only for commercial property. From 10 August 2026 an SMSF cannot enter a new limited recourse borrowing arrangement to acquire residential property. Commercial real estate LRBAs are unaffected and continue exactly as before, which includes business premises an owner leases back to their own operating company.
Nothing. Existing residential LRBAs are grandfathered and can run to natural completion. The change is prospective only — it stops new arrangements rather than unwinding old ones. An arrangement entered before the deadline stays valid even if settlement happens afterwards.
Yes, provided the principal does not increase. Refinancing on those terms lets you restructure debt or change lender without losing grandfathered status. Drawing additional funds against the property is what puts that status at risk, so any refinance should be checked before it is executed rather than after.
An LRBA is the structure that lets a super fund borrow while limiting the lender's claim to the single asset being bought. If the fund defaults, the lender can take that property and nothing else in the fund. LRBAs were introduced in 2007 and have been the only lawful way for an SMSF to gear a direct property purchase.
Yes. The ban is on borrowing, not on ownership. An SMSF can still buy residential property using cash it already holds. The usual rules continue to apply — the purchase must meet the sole purpose test, and neither members nor related parties can live in it or rent it.
Three, broadly. Buy commercial property with an LRBA, which is untouched. Buy residential property unleveraged from the fund's existing balance. Or hold the residential investment outside super in a personal name, trust or company, which gives up the concessional tax treatment but restores access to ordinary lending. Which one fits depends on the fund balance, the timeline and the rest of the plan.
For commercial property held by a business owner, often yes — the rent moves from an outgoing to a contribution to their own retirement savings. For geared residential property the question is now moot for new purchases. For unleveraged residential the answer depends on whether the fund has the balance to buy without gearing and still stay diversified enough to meet its investment strategy.
This page summarises publicly reported changes to the superannuation borrowing rules as at July 2026 and is general information only. It does not take into account your objectives, financial situation or needs, and it is not a substitute for advice on your own fund. Trustees should confirm their position with their adviser, accountant or licensee before acting — particularly on refinancing a grandfathered arrangement, where the treatment is still settling.
Opes Financial Solutions Pty Ltd · Authorised Representative 409415 of La Verne Capital Pty Ltd · Authorised Credit Representative 45250 of Outsource Financial Pty Ltd.
Continue reading
- SMSF commercial propertyThe structure that still allows borrowing — and how business owners use it.
- SMSF lending overviewWhere the practice sits after the change.
- Superannuation adviceFund choice, consolidation and contribution strategy.
- Finance brokingLending outside super, where residential gearing still works.
Not sure where your fund stands?
If you have an existing SMSF loan, are mid-purchase, or were planning one, a short call will tell you which side of the line you are on.