If you’ve been thinking about using your self-managed super fund to buy an investment property, there’s a new deadline you need to know about and it’s landed much faster than most people expected.
What’s actually changed
For almost two decades, Australians running a self-managed super fund (SMSF) have had the option of borrowing money inside their fund to buy property, using something called a Limited Recourse Borrowing Arrangement, or LRBA. In plain terms, it let your super fund take out a loan, much like a regular mortgage, to purchase a property, with only that one property at risk if things went wrong.
That option is now closing for residential property. On June 23 2026, the Federal Government struck a deal with the Australian Greens to secure their support in the Senate for a broader package of tax reforms covering negative gearing and the capital gains tax discount. The price of that support was an amendment banning SMSFs from entering new LRBAs to buy residential property. The bill has since passed both houses of Parliament and received Royal Assent on June 26 2026.
The cut-off date that matters
Here’s the detail that’s causing the scramble: the ban doesn’t start the day the law is signed. It kicks in 45 days after Royal Assent, which puts the practical start date at around August 10 2026.
Crucially, what protects you isn’t your loan approval or your settlement date, it’s whether you’ve exchanged contracts before that cut-off. If you sign a contract to purchase before the ban commences, your arrangement is grandfathered, even if the loan is formally approved or the sale settles afterwards. Miss that window, and a new LRBA for residential property is no longer available to you.
Who isn’t affected
It’s worth being clear about what this change does not touch:
• Existing arrangements are safe. If your SMSF already has an LRBA in place for residential property, nothing changes. It won’t be unwound.
• Refinancing is still allowed. You can refinance an existing SMSF property loan on normal commercial terms.
• Property owned outright is unaffected. If your fund holds residential property without any borrowing, this change doesn’t apply to you at all.
• Business premises are carved out. SMSFs can still use an LRBA to buy “business real property”, broadly, premises used for running a business, including your own and lease it back at market rent.
• Super’s tax treatment is unchanged. Earnings inside an SMSF are still taxed at the concessional 15 per cent rate in accumulation phase, and at 0 per cent in pension phase for members over 60.
Why the Government made the change
The Greens pushed for the ban as a condition of supporting Labor’s wider tax package, arguing that SMSF borrowing for residential property let wealthier investors sidestep tougher tax rules being introduced elsewhere in the property market. Treasurer Jim Chalmers has said the change is expected to raise around $50 million over the forward estimates, and has described SMSF lending as a small slice of the market.
Not everyone agrees the change makes sense.
Industry voices, including the SMSF Association, have criticised the way the amendment was introduced late in the process without broader consultation, and some have argued that removing SMSFs from the new-build lending pool could ultimately mean fewer homes built, rather than more.
What this means if you’ve been considering it
If a residential property purchase inside your SMSF has been on your radar, the message from advisers is consistent: the timeline has compressed from months to weeks.
If you want to proceed under the current rules, you need to have contracts exchanged before the cut-off not just finance approved. Some in the industry also note that lenders may pull back from offering SMSF residential loan products ahead of the legal deadline, which could shrink the realistic window even further.
If you’re unsure where you stand whether that’s an existing arrangement, a purchase already in progress, or exploring the business real property alternative now is the time to have that conversation with your broker and your accountant, rather than after the window closes.
This article is general information only and does not take into account your personal financial situation. It does not constitute financial, taxation or legal advice. Please speak with a licensed adviser about how these changes may affect you.
Steven Korner is the Principal Mortgage Broker at The Finance Korner in Penrith.