If you have thought about buying property through your self-managed super fund, the rules change on 10 August 2026, and this post explains what closes, what stays open, and where the real opportunity now sits.
Buying property through super has always been one of the more powerful moves available to business owners and investors. A federal law change lands on 10 August 2026, and it closes one path while leaving another wide open. If you have been weighing up an SMSF commercial property loan, or you own the premises your business trades from, the next few weeks matter. We will walk you through what an LRBA actually is, what the change does, and the option that survives it.
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A limited recourse borrowing arrangement (LRBA) is the structure that lets your self-managed super fund (SMSF) borrow money to buy a single asset, such as a property. The asset sits in a separate holding trust, often called a bare trust, until the loan is repaid. “Limited recourse” means the lender’s claim is limited to that one asset.
That last point is the whole reason the structure exists. If the loan defaults, the lender can take the property held in the bare trust, but it cannot reach the other assets inside your super fund. Your shares, your cash, and your other investments stay protected. The Australian Taxation Office sets out the borrowing rules for these arrangements under section 67A of the Superannuation Industry (Supervision) Act 1993 (see the ATO limited recourse borrowing arrangement provisions.
In plain terms, an LRBA is a ring-fenced loan. Your fund borrows, buys one thing, and the rest of your retirement savings are kept at arm’s length from the debt. That protection is why so many business owners have used LRBAs to buy property through super.
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From 10 August 2026, a new SMSF limited recourse borrowing arrangement can only be used to acquire business real property. New borrowing to buy residential property inside super closes on that date. The change is now law, not a proposal, having received Royal Assent on 26 June 2026.
It came through the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026, which amends the borrowing rules in the SIS Act. The ATO confirms the change “applies to arrangements entered into on or after 10 August 2026” and that real property acquired under a new LRBA must be business real property (source: ATO, limited recourse borrowing arrangement provisions). Business real property, in short, is land and buildings used wholly and exclusively in one or more businesses. Residential rental property does not meet that test.
So the headline is simple. If your plan was to borrow inside super to buy a residential investment property, that door is closing. If your plan involves commercial premises, the door stays open. That distinction is the difference between the two halves of this post.
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For a residential SMSF purchase to beat the cut-off, what matters is the contract date, not the settlement date. SMSF specialists are consistent on this: a contract validly entered into before 10 August 2026 is protected under the transitional rules, even if settlement happens after that date. Getting the contract signed in time is the trigger, not getting the keys.
There is a practical trap here worth flagging. Some lenders and trust-establishment providers are tightening well ahead of the legal deadline. Grow SMSF, a specialist provider, has published a last-order date for new bare trust setups in early July and an earlier last-business-day for entering residential LRBA contracts, ahead of the 10 August commencement (source: Grow SMSF, June 2026). In other words, the full window to 10 August may not be available with every lender.
If you are relying on this timeline, do not assume you have until the last day. Speak to a broker and your accountant now, so the contract, the bare trust, and the finance can all line up in time. This is general information only, and the exact deadline for your situation depends on your lender and your adviser’s guidance.
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Plenty stays on the table. The change only affects new residential borrowing. Existing arrangements are grandfathered, refinancing of a pre-existing loan is still permitted, you can still buy residential property outright with cash, and you can still borrow to buy commercial property.
The ATO confirms the change “does not impact arrangements existing prior to this date” and “does not impact the refinancing of arrangements existing prior to this date”. Here is the fuller picture:
If your SMSF already has an LRBA in place before 10 August 2026, nothing about that loan changes. It is grandfathered and continues under the old rules. You can also refinance an existing arrangement, which matters in a market where lenders are competing hard for refinancers.
The change is about borrowing, not owning. If your fund has the cash, it can still buy residential property outright. No loan, no LRBA, no restriction under this reform.
This is the important one. Your SMSF can still take out a new loan to buy business real property. This is where an SMSF commercial property loan comes into its own, and it is the strategy most business owners will want to understand before 10 August.
Not sure which of these paths fits your fund? Have a quick chat with a Fox Home Loans broker before the rules change. Talk to us. We do the comparison work, you decide what is right for you.
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Yes, in most cases you can. Your SMSF may be able to buy the commercial premises your business trades from, then lease them back to your operating business at market rent. Because the property is used in a business, it qualifies as business real property. A new SMSF loan can still fund it.
The appeal is in how the money moves. The rent your business pays for the premises is generally a tax deduction for the business, under ordinary income tax rules. That same rent lands inside your super fund as rental income, where it is taxed at just 15% while the fund is in accumulation phase, and at 0% on assets supporting a retirement-phase pension (source: SMSF tax specialist commentary, DBA Lawyers, 2026). The rent is also steadily paying down the fund’s loan, so you are building equity in an asset your business uses every day.
There is a structural advantage on top of the tax treatment. Because the property sits inside an LRBA, it carries the same limited-recourse protection described earlier. And business real property leased to your own business is treated as a specific exception to the SMSF in-house asset rules, so it does not count toward the 5% in-house asset cap that limits most related-party dealings (SIS Act sections 71 and 83; see the ATO SMSF investment restrictions.
One more point worth knowing for planning: your fund can even buy business real property from you or a related party, provided it pays market value (SIS Act section 66). That is a rare exception, because super funds generally cannot buy assets from members at all. So if you already own your business premises personally, moving them into super may be on the table. Your accountant and SMSF adviser need to run those numbers, but the pathway exists.
For context on what your fund can borrow, most lenders cap the loan-to-value ratio (LVR, the loan amount as a percentage of the property value) for SMSF commercial property around 60% to 70%, with more conservative lenders sitting lower. That means your fund needs a meaningful deposit and a serviceability buffer, which is exactly the kind of scenario where a broker across the panel earns their keep.
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The commercial strategy only works if the details are done properly, and getting them wrong is expensive. The three things that matter most are an arm’s-length market-rent lease, an independent valuation, and clean documentation. Skip any of them and you risk a compliance breach or a punishing tax outcome.
Start with the lease. Every SMSF transaction has to be on arm’s-length terms under section 109 of the SIS Act, and that includes the rent your business pays the fund. It must be genuine market rent, backed by a written lease and supported by an independent rental valuation, with payments made on time like any commercial tenant. This is not a formality. If the rent is below market, the income can be treated as non-arm’s-length income (NALI) and taxed inside the fund at 45%, instead of the concessional 15% (ITAA 1997 section 295-550; SMSF tax specialist commentary, 2026). That single mistake can wipe out the tax advantage the strategy is built on.
Then there is the property test itself. Business real property means land and buildings used wholly and exclusively in a business. A mixed-use site, a home office, or a property with a residential component can fail that test, so the classification needs to be confirmed before you commit. And the whole structure, the bare trust, the loan, the lease, and the fund’s investment strategy, has to be documented and reviewed by your accountant or SMSF adviser.
This is where we are careful to stay in our lane. Fox Home Loans arranges the finance. The fund structure, the tax position, and whether an SMSF suits your circumstances are questions for a licensed accountant or SMSF specialist. We work alongside them, we do not replace them.
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This strategy suits some situations far better than others, and it is not for everyone. It tends to make sense if you run an established business, you already pay rent to a landlord, your fund has a reasonable balance, and you want to build retirement wealth using an asset your business genuinely needs.
Ask yourself: Do I want my business to stop paying rent to someone else and start paying it into my own super? Does my fund have enough of a balance to cover the deposit, costs, and a serviceability buffer? Am I comfortable with the fund holding a large, single, illiquid asset for the long term?
If the answer to those is yes, an SMSF commercial property loan is worth a proper conversation. If your fund balance is modest, if your business income is volatile, or if you would be putting nearly all of your super into one property, it may not be the right move, and a good adviser will tell you so. The point of getting advice is to find out before you commit, not after.
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The 10th of August 2026 change closes one path and leaves a genuinely valuable one open. The hard part is lining up the finance, the timing, and the right specialist advice, and that is the part we handle. We will handle the heavy lifting on the finance side: comparing lenders across our panel, matching your fund’s position to the right SMSF commercial property loan, and coordinating with your accountant so the pieces fit together.
You may be eligible to buy your business premises through your SMSF, or to refinance an existing arrangement, but the only way to know is to map it against your situation. A free, friendly chat costs nothing and could open a door you did not know was still there. No pressure to proceed.
Talk to Fox Home Loans, your trusted mortgage broker on the Sunshine Coast, and we will help you work out your next step alongside your accountant or SMSF adviser.
 Bill Robb |
Bill has over 26 years of experience working in the finance industry. He has worked across a number of different businesses including Home Loans, Personal Loans, Collections and Insurances. Bill's passion is to utilise his knowledge and experience in the industry to assist clients in meeting their financial goals.
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Reviewed by: Nathan Drew ✅ Fact checked 📅 Last updated: Jul 24, 2026 |
Yes, you can refinance a property using an SMSF loan, but approval depends on your fund’s financial position and lender criteria. Refinancing through your SMSF can help reduce interest rates, as long as it follows superannuation rules and your investment strategy.
An SMSF loan lets your self-managed super fund borrow money to invest in property, with the property held by the fund. These loans are limited recourse, meaning the lender can only claim the purchased asset if the fund defaults, while repayments come from the fund itself.
An SMSF loan is a type of home loan that enables a self-managed super fund (SMSF) to purchase residential investment property or commercial property while remaining compliant with superannuation regulations. These loans typically operate under a limited recourse arrangement, which means that if the SMSF defaults, the lender can only claim the property purchased with the loan, not the other assets held within the fund. This structure allows SMSFs to invest in property while protecting the broader fund from risk.
SMSF borrowing limits vary but will go up to a maximum of 90% of the property’s value. The exact amount depends on your fund’s balance, the property type and compliance with superannuation regulations.
The type of properties you can look to purchase are residential investment properties as long as they are a single requirable asset (not multiple dwellings) as well as commercial properties which can be for investment or owner occupied.
Give us a call, and our experienced team will be able to walk you through your unique situation.
