BORROWING IN SELF MANAGED SUPERANNUATION FUNDS FOR RESIDENTIAL PROPERTY TO BE BANNED

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The Federal Government has recently reached an agreement with the Greens to prohibit Self-Managed Superannuation Funds (SMSFs) from entering into new Limited Recourse Borrowing Arrangements (LRBAs) to purchase residential property.
 
The key changes and their implications are outlined below:

  • Residential property borrowing ban: SMSFs will no longer be able to enter into new LRBAs to acquire residential real estate.
  • When the changes take effect: The changes to the LRBA laws were scheduled to come into effect 45 days after receiving Royal Assent. Royal Assent was granted on the 26th of June 2026 meaning the changes become Law from 10th of August 2026. This means that clients need to have a signed contract in place by 10th of August 2026 or forever miss out on the opportunity to borrow money to invest in residential property. Settlement can occur after this date.
  • Existing arrangements protected: All existing residential property LRBAs will remain in place. There will be no requirement to unwind these loans, and refinancing of existing LRBAs will continue to be permitted.
  • Commercial property unaffected: LRBAs used to acquire business real property, including commercial, industrial and certain retail premises, will continue to be allowed.

 
If you are considering purchasing a residential property using borrowings through a new or existing SMSF, it is important to seek advice before these changes take effect.
 
If you would like to discuss how these proposed changes may affect your circumstances, or require further information, please contact your Client Manager or our office on (02) 8543 6800.