SMSF Property Borrowing Rules Are Changing

Recent changes to superannuation legislation will affect how Self-Managed Super Funds can purchase residential investment property using borrowing arrangements.

From 10 August 2026, SMSFs will generally no longer be able to enter into a new Limited Recourse Borrowing Arrangement, commonly known as an LRBA, to acquire residential investment property.

For clients who are already considering purchasing a residential investment property through their SMSF using borrowing, the key issue is timing.

To continue under the current rules, the contract of purchase must be entered into and executed before 10 August 2026. Settlement does not need to have occurred before this date. The important point is that the signed contract is in place before the new rules commence.

Existing residential property LRBAs are not affected by these changes. SMSFs may also still be able to purchase residential property outright using available fund cash, subject to the usual SMSF rules, investment strategy and compliance requirements.

It is also important to note that the transitional arrangements relate to the ability to continue with a borrowing arrangement. They do not provide any additional capital gains tax concession or change the usual tax treatment of an SMSF investment.

For clients considering an SMSF residential property purchase using borrowing, this creates a limited window in which to act. Finance approval, SMSF structuring, bare trust documentation, legal review and contract execution can all take time.

If you are considering purchasing residential property through your SMSF, we recommend seeking advice as soon as possible to understand your options and the steps required before the changes take effect.

Please contact WAI Accounting Services to discuss your circumstances.

Tel: (08) 9267 3800 or Tes on 0404 051 557

Email: tes@waigroup.com.au or sales@waigroup.com.au