SMSF Residential Property Borrowing: What the New LRBA Ban Means for Investors
The Government has struck a deal with the Greens to ban new borrowing inside self-managed super funds to buy residential property. If this is part of your strategy, here is a clear, calm look at what is changing and the options worth discussing.
On 23 June 2026, the Prime Minister and Treasurer confirmed an agreement with the Greens to ban new Limited Recourse Borrowing Arrangements (LRBAs) for residential property held inside self-managed super funds (SMSFs). The measure was the price of the Greens’ support for the Government’s broader package overhauling the capital gains tax discount and negative gearing.
The change applies going forward only. It does not unwind existing arrangements, and it does not change the underlying tax treatment of super. Below is a plain-English summary — not a reason to rush, but a reason to get informed and plan properly.
What is changing
- New borrowing banned. SMSFs will no longer be able to take out new LRBAs to buy residential property.
- Existing arrangements protected. If your fund already holds a residential SMSF loan, it is grandfathered and unaffected.
- Cash purchases still allowed. An SMSF can still buy residential property outright where it can fund 100% without borrowing.
- Commercial property unaffected. Borrowing to buy commercial or business real property inside an SMSF remains permitted.
The expected timeline
The ban does not begin immediately. Based on the announced position, it takes effect 45 days after the legislation receives Royal Assent. Parliament is expected to pass the bill before rising in early July 2026, which points to a commencement date around mid-to-late August 2026. These dates are projections and could shift as the legislation moves through the Senate.
An important detail confirmed by the Government: it is the contract date that matters, not the settlement date. A residential SMSF purchase with a signed contract of sale in place before commencement is intended to be protected, even if the loan settles afterwards.
What this means for you
If you currently hold a residential property in your SMSF through an LRBA, nothing changes — your arrangement is safe. If you have been considering this strategy, it is worth understanding your position and timeline so any decision is made on the facts, not under pressure.
Review where you stand
If you have an arrangement in progress, understand whether your contract date sits within the protected window.
Speak to your specialists
Your SMSF accountant or financial adviser can confirm whether a leveraged residential purchase still suits your circumstances and risk profile.
Get the structure right
SMSF property purchases are compliance-heavy. The purchasing entity and contract details must be correct — this is where advice matters most.
The bottom line
Leveraged SMSF residential property investing is being phased out for new arrangements. Existing loans are safe, commercial borrowing continues, and cash purchases remain possible. If this affects your plans, the sensible next step is a conversation — clear-eyed, well-advised, and on your own timeline.
Thinking about an SMSF or other property loan?
Every situation is different, and the finer tax detail is best confirmed with your accountant or SMSF specialist. Where I can help is the lending side — understanding your options, your borrowing capacity, and getting the right loan structured correctly while it is still available.
Whether it is an SMSF arrangement in progress, a residential or investment loan, refinancing, or finance for your business or commercial property, I work with a wide panel of lenders to find a deal that fits. If you are weighing up your next move, get in touch for a confidential, no-obligation chat — and feel free to pass this on to anyone in your network who might find it useful.
General advice disclaimer: This article is general information only and does not constitute financial, taxation, legal or credit advice. It does not take into account your objectives, financial situation or needs. Legislation referenced is current as at 24 June 2026 and remains subject to change as it passes through Parliament. Before making any decision regarding your SMSF, you should seek advice from a qualified financial adviser, SMSF specialist or accountant. Enlighten Finance — Australian Credit Licence 434567.
Enlighten Finance · ACL 434567 · Melbourne, Australia
www.enlightenfinance.com.au · 0433 199 363