From 10 August 2026, SMSFs can no longer set up a new loan (called an LRBA) to buy residential property. That door is closing. But the door to borrowing for commercial property, like an office, warehouse, or your own business premises, is staying wide open. The rule doesn't ban SMSF borrowing. It bans borrowing for anything that isn't "business real property." If your fund can still afford to buy a house with cash, that's still allowed too. It's the borrowing for a house that's off the table.
Why this one landed on my desk
I've had a few clients ask me some version of "wait, is my SMSF property plan dead?" this month, and the honest answer is: some of it, maybe. But not all of it, and definitely not the commercial side. I've spent enough time inside banks and now inside deals to know that when a rule like this drops, most people hear "banned" and switch off before they hear the actual detail. So let's go through it properly, because there's still a real strategy here for the right person.
What actually changed?
The government passed the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, which received Royal Assent on 26 June 2026. Buried in it was a change to how SMSFs can borrow.
From 10 August 2026, an SMSF can no longer enter a new LRBA to buy residential property The change only affects borrowing. It doesn't touch existing loans or stop your fund buying a house outright with cash If your fund exchanges contracts on a residential property before 10 August 2026, using an LRBA, that arrangement is protected even if settlement happens after the date
Can my SMSF still borrow to buy commercial property?
Yes. This is the part that gets lost in the headlines. The new rule only blocks borrowing for property that doesn't meet the definition of "business real property" under the Superannuation Industry (Supervision) Act.
Commercial premises used wholly and exclusively in a business generally qualify. This includes buying your own business premises through your SMSF, a strategy plenty of business owners already use Share and unit parcels can also still be financed through an LRBA where they meet the rules
The test isn't really "residential vs commercial" in the way people assume. It's "does this property meet the business real property definition." Most commercial premises will. Some won't.
What should I do if I was planning to buy residential property through my SMSF?
If you can exchange contracts before 10 August 2026 using an LRBA, your arrangement is grandfathered. If that timeline isn't realistic, borrowing that way won't be an option after the date, but buying residential property with the fund's own cash still is.
If you already have an LRBA on a residential property, nothing changes for you. Existing arrangements can continue and can still be refinanced.
There's a real difference between "I can't do this at all anymore" and "I can't do this one specific way anymore." Most people I've spoken to are actually in the second category.
FAQ
*Does this ban stop my SMSF owning residential property at all? No. It stops your fund borrowing to buy it. Your SMSF can still purchase residential property outright using its own cash, as long as that fits your fund's investment strategy.
*Is my existing SMSF loan affected? No. Existing LRBAs, including residential ones set up before the change, are grandfathered and can continue, including refinancing on normal terms.
*What's the deadline to still use an LRBA for residential property? Contracts need to be exchanged before 10 August 2026. It's the contract date that matters, not the settlement date.
*Can I use my SMSF to buy my own business premises? In most cases, yes. Commercial property used wholly and exclusively in a business is exactly the kind of asset this rule was designed to keep available.
Where this leaves you
This isn't the end of SMSF property investing. It's a narrowing of one specific path, and a reminder that the commercial route hasn't gone anywhere. If anything, it's a good moment to actually get clear on what your fund can still do, instead of assuming the worst from a headline. You've got more options here than you may know.
Ready to work out what this means for your fund?
Book a free, no-pressure call and I'll walk you through whether your SMSF plans are affected, and what your options actually look like now. Book a free call
Sources and references
SMSF Australia, "SMSF LRBA Lending Changes: Government Ban on Residential Loans in SMSFs" — https://smsfaustralia.com.au/smsf-lrba-lending-changes-government-ban-on-residential-loans-in-smsfs/
iCare Super, "SMSF Residential Property LRBA Ban Now Law – 10 August 2026 Deadline Confirmed" — https://www.icaresmsf.com.au/smsf-residential-property-lrba-ban-now-law-10-august-2026-deadline-confirmed/
Boyce, "SMSF LRBA Ban and the Business Real Property Test" — https://www.boyceca.com/resources/smsf-lrba-ban-business-real-property-test/
EEA Advisory, "What the Proposed LRBA Ban Means for SMSF Investors" — https://eea-advisory.com.au/article/smsf-lrba-ban-property-investment/
Exant Advisory, "Ban on New SMSF Borrowing for Residential Property Now Law" — https://exantadvisory.com/ban-on-new-smsf-borrowing-for-residential-property-now-law/
Any information or advice contained in this article is general in nature only and has been prepared without considering your individual personal objectives, financial situation or requirements. Before acting or relying on this information, you must consider the appropriateness of this information with regard to your individual circumstances and objectives.
April Six Pty Ltd is a Credit Representative of Astute Financial Management Pty Ltd | Australian Credit Licence 364253 | Credit Representative Number 554762.
About Eshanee: Eshanee Collins is the founder of April Six, a Sydney-based mortgage broker for first home buyers and first-time property investors across Australia. *
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