SMSF Property Borrowing Is Changing: Here’s What Every Investor Needs to Know
Something big happened on 23 June 2026. And if you have an SMSF, or you’ve been thinking about buying property through one, this affects you directly.
The Albanese government struck a deal with the Greens to ban new limited recourse borrowing arrangements (LRBAs) for residential property inside self-managed super funds, clearing the path for its wider tax overhaul to pass the Senate.
New LRBAs by super funds for residential property will be banned 45 days after the bill receives royal assent. The bill is expected to pass the Senate before Parliament rises on 2 July 2026. The Adviser
What’s actually changing?
The ban applies prospectively. Existing SMSF property arrangements will be exempt, and a 45-day transition period will apply for any investments currently in progress at the time the bill receives royal assent.
So if you already hold a residential LRBA inside your SMSF, nothing changes. Existing SMSF borrowing arrangements are expected to remain in place under the announced approach. Contracts signed before the ban’s commencement date are protected, even if settlement or loan approval hasn’t yet happened.
If you’re mid-process right now, the advice is simple: move quickly and get contracts signed.
What’s still available inside your SMSF?
This is the part most people are missing in the noise.
The ban applies to new residential LRBAs only. The SMSF structure itself remains highly tax-effective, 15% on income during accumulation, 0% in pension phase and the one-third CGT discount is preserved.
Even more importantly: following the 2026 Budget, an SMSF is now the only structure in which you can purchase an existing residential property as an investment and still negatively gear it. The personal name, family trust, and company pathways are all affected by the new restrictions. The SMSF is not.
And commercial property? The ban specifically targets residential property. LRBAs for commercial property are confirmed unaffected. For business owners, holding commercial property inside an SMSF through a borrowing arrangement remains one of the most tax-effective strategies available.
What investors on the ground are saying
Reaction in the SMSF community has been strong. Many feel the Greens’ move disproportionately hits smaller, everyday investors, not the wealthy. As one commenter put it: “If you need a loan to purchase a property, how does that mean you are wealthy?” Smaller SMSFs are often the ones that use the LRBA strategy precisely because they don’t have the cash to buy outright.
There’s a fair point there. A lot of Australians have spent years building their SMSF with a clear plan, and this change lands right in the middle of that.
The rules are shifting. But property inside super is still a powerful tool, it just looks different now. Direct cash purchases, commercial property, and careful portfolio strategy all remain on the table. The Australian Government’s tax reform package is still evolving. We’ll keep you updated as the final legislation comes through.
At D’MANSHA, we work alongside a trusted network of SMSF professionals and can connect you with experienced:
✔️ SMSF Accountants
✔️ SMSF Lending Specialists
✔️ Financial Advisers
✔️ Solicitors & Conveyancers
✔️ Property Professionals
Call us on 0406 112 244 or book a confidential, obligation-free discovery call today.