By Jason Given - 2026-08-31 - 7 min read
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026, following an agreement between the Government and the Australian Greens. The new rules commenced 45 days later on 10 August 2026.
The key change: SMSFs can no longer enter into new Limited Recourse Borrowing Arrangements (LRBAs) to purchase residential property. Any LRBA entered into on or after 10 August 2026 to acquire real property can only be used to acquire business real property - broadly, land and buildings used wholly and exclusively in one or more businesses.
If your SMSF exchanged a binding contract to acquire residential property before 10 August 2026, the existing rules apply - even if the contract has not yet settled or the LRBA has not yet been formally entered into. This protects funds that were already in the process of purchasing.
For existing residential LRBAs, nothing changes at all. There is no forced sale, no LVR reset, no value trigger, and no compliance issue arising solely from the new legislation. You can continue servicing the loan, collecting rent, and managing the property as you always have. You can also refinance an existing residential LRBA - the grandfathering applies to the arrangement, not the specific lender.
If you already have an SMSF residential property loan: nothing changes. Your existing LRBA continues as normal. If you want to refinance to a better rate, Lendology can help - the grandfathering protections apply. Book a review.
Commercial property LRBAs are completely unaffected by the August 2026 changes. SMSFs can still borrow to purchase business real property, which includes offices, warehouses, retail premises, factories, and other commercial buildings used wholly and exclusively in one or more businesses.
A key advantage of commercial property within an SMSF is that it can be leased to a related party at market rates. This means a business owner can have their SMSF purchase the premises their business operates from, pay rent from their business to their super fund, and build retirement wealth through both rental income and capital growth. This strategy remains fully available.
Lendology arranges commercial SMSF loans and works alongside your financial advisor and accountant to structure the LRBA correctly.
If you were considering using your SMSF to borrow for a residential investment property, the landscape has changed. Here are the main alternatives:
The Government's stated rationale is that leveraged residential property investment through SMSFs contributed to housing affordability pressures by adding tax-advantaged demand to the residential market. The ban is part of a broader suite of housing reforms in the May 2026 Budget, including changes to negative gearing on established property and the CGT discount.
Commercial property was excluded from the ban because it does not compete with residential housing supply and the related-party leasing provisions support small business.
No. From 10 August 2026, SMSFs cannot enter into new Limited Recourse Borrowing Arrangements (LRBAs) to purchase residential property. Existing residential LRBAs entered into before this date are fully grandfathered and unaffected. An SMSF can still buy residential property outright with cash - it just cannot borrow to do so.
Nothing changes. Existing residential LRBAs entered into before 10 August 2026 are fully grandfathered. There is no forced sale, no LVR reset, and no compliance issue. You can continue making repayments, refinancing the existing loan, and managing the property as normal.
Yes. Commercial property LRBAs are completely unaffected by the August 2026 changes. SMSFs can still borrow to purchase business real property, which can be leased to related parties (such as the fund members' own business) at market rates. Lendology arranges commercial SMSF loans.
If you want to invest in residential property, the main alternatives are: buying outside your SMSF through a personal investment loan (with full negative gearing benefits for new builds), buying residential property outright within your SMSF if the fund has sufficient cash, or investing in listed property trusts (REITs) within your SMSF for property exposure without direct ownership.
Yes. The grandfathering provisions protect existing LRBAs, including the ability to refinance to a different lender. If you have an existing SMSF residential loan and want to review your rate, Lendology can help compare options across SMSF-accredited lenders.
Have questions about SMSF lending?
Book a chat with Jason or Steve. We work alongside your financial advisor and accountant.