The short answer? For residential property, no. From 10 August 2026, self-managed super funds can no longer enter a new limited recourse borrowing arrangement (an LRBA) to buy residential property. For commercial property, and for buying residential property outright with cash, the answer is still yes.
That’s the whole change, and it landed with almost no warning. On 23 June 2026, the government did a deal with the Greens to get its budget tax package through the Senate, and the price was a change almost nobody had on their bingo card. The bill passed both houses on 25 June, received royal assent on 26 June, and the ban commenced 45 days later, on 10 August 2026.
The headlines were dramatic. The reality, once you run the numbers, is much smaller. Let’s call the thing the thing.
What an LRBA actually is, in plain English
Super funds are generally banned from borrowing. Since 2007, SMSFs have had a carve-out: a limited recourse borrowing arrangement, where the fund borrows to buy a single asset held in a separate trust. If the loan goes bad, the lender can only claim that one asset. The rest of the fund is protected.
The timing of that 2007 carve-out was ironic, arriving just before the GFC gave everyone a live demonstration of what gearing does on the way down. Scott and Phil cover that history in the podcast episode on the change.
The new law makes one operative amendment. From 10 August 2026, an LRBA can only be used to acquire real property if it’s business real property. Residential property doesn’t meet that definition, so the borrowing door for houses and apartments inside SMSFs is closed.
What did not change
This list is longer than the headline suggests:
Existing arrangements are grandfathered. If a geared residential property was already held in an SMSF before commencement, nothing happens to it. Contracts exchanged before 10 August 2026 are also protected, even where settlement happens after that date, and refinancing of pre-commencement borrowings is still allowed.
Commercial and business property borrowing is untouched. Where a business owner holds their premises in super, that strategy still stands.
Cash purchases of residential property in super are unaffected. No borrowing, no change.
And the tax treatment of super itself hasn’t moved at all.
Legislative details are current as at September 2026, per the Treasury Laws Amendment (Tax Reform No. 1) Act 2026. If any of this applies to your fund, confirm the specifics with your SMSF adviser or accountant, since eligibility and grandfathering turn on dates and documents.
Why the market impact is close to nil
When the change dropped, Scott and Phil did the thing the government apparently didn’t: they opened the ATO’s own spreadsheets and ran the numbers. Geared residential property turns out to be a tiny sliver of super, less than 1% of the entire Australian property market. Barely a rounding error.
So the idea that this will move house prices doesn’t really stack up. As Phil put it on the podcast, pulling buyers out of a market has never once made it work better. The rule change is real. The market impact is almost nil.
The full episode walks through what an LRBA is, what’s still on the table, and the one genuine risk the rule was probably aimed at. You can find it on the Wealthlab podcast page.
The one risk worth respecting
If the ban was aimed at anything real, it’s this: a whole nest egg concentrated in a single geared asset. Borrowing magnifies returns in both directions, and a retirement fund holding one leveraged property has no diversification to absorb a bad outcome. We generally find that concentration, not gearing itself, is what turns a rough patch into a genuine problem.
That risk didn’t need a Senate amendment to be worth thinking about. It applied before 10 August, and for grandfathered arrangements it still applies now.
An odd side effect of the tax changes
Here’s a quirk. After the May 2026 budget changes to negative gearing and the CGT discount, an SMSF is now one of the few structures where an existing residential property can still be negatively geared. The borrowing door closed at the same time the tax door stayed open, but only for arrangements already in place.
That kind of tension is exactly the sort of thing worth thinking through properly, not reacting to. We watched the same pattern after the announcement that we see after every rule change: headlines catch fire, and the temptation is to do something, anything, right now. Sell the property. Restructure the super. Beat a deadline.
Lifestyle, wealth, tax. In that order.
The order that has served our clients well for years hasn’t changed. Work out the life you want first, then the wealth plan that funds it, then the tax structure that wraps around it. A rule change shuffles the third one. It doesn’t get to rewrite the first two.
When one window closes, the job is simply to find the ones still open, and there are plenty. Superannuation kept every one of its tax advantages through this change. Contribution strategies, account-based pensions, the Age Pension interaction, none of it moved. If the SMSF headlines have you wondering what it all means for your own retirement planning, that’s the conversation worth having, and it’s a broader one than any single structure.
Want a quick general picture of where you stand first? Run your numbers through the free Wealthlab super calculator, or take the Wealthlab retirement quiz.
FAQ
Can an SMSF still borrow to buy property in 2026? Not for residential property. From 10 August 2026, new limited recourse borrowing arrangements for residential property are banned. Borrowing to acquire business real property, such as commercial premises, is still permitted, and SMSFs can still buy residential property outright without borrowing where it fits the fund’s investment strategy.
What happens to existing SMSF property loans? They’re grandfathered. Arrangements in place before 10 August 2026 continue under the old rules, contracts exchanged before that date are protected even if settlement came later, and refinancing of pre-commencement borrowings remains allowed.
Why was SMSF residential borrowing banned? The ban was the price of Greens support for the government’s broader 2026 budget tax package, which reformed the CGT discount and negative gearing. It passed both houses on 25 June 2026 and received royal assent on 26 June 2026, with the ban commencing 45 days later.
Will the SMSF borrowing ban affect house prices? It’s unlikely to have a visible effect. Geared residential property inside SMSFs represents less than 1% of the Australian property market, so removing new buyers from that segment is a rounding error in the wider market.
Can an SMSF still buy commercial property with a loan? Yes. The ban applies only to real property that isn’t business real property. Commercial premises, including a business owner’s own premises, can still be acquired through a limited recourse borrowing arrangement.
Does the change affect super’s tax treatment? No. The tax treatment of superannuation itself didn’t move. The change is narrowly about what new LRBAs can be used to buy.
Wondering what any of this means for your retirement?
Wealthlab doesn’t provide SMSF services, but if the headlines have raised questions about your own retirement plan, super strategy or pension entitlements, book a free chat with the Wealthlab team. We’d rather talk it through than have you stew on it.
