From 10 August 2026, SMSFs can no longer enter new Limited Recourse Borrowing Arrangements (LRBAs) to buy residential property. Full detail on the exact rule is available directly from the ATO’s own explainer on the LRBA changes. If you already hold a residential LRBA, nothing changes for you — existing arrangements are fully grandfathered and can still be refinanced.

But borrowing in super hasn’t disappeared. SMSFs can still borrow to acquire commercial and business real property — and for many investors, that makes commercial one of the few remaining ways to use leverage inside their fund.

What You Can Still Do

• Borrow for commercial property. New LRBAs remain available for business real property — offices, warehouses, retail premises and similar assets used wholly and exclusively in a business.
• Buy residential property with fund capital. Cash purchases of residential property are unaffected. What’s changed is that you can no longer gear into it with a new loan.
• Keep an existing residential loan running. Refinancing, changing lenders, and continuing repayments on a pre-10 August 2026 residential LRBA all remain permitted.

The Power of Leverage — Now a Commercial Property Strategy

Leverage means using the bank’s money alongside your own to control a larger asset than your deposit alone would buy. Here’s how it plays out with a commercial property:

Illustrative example only — actual growth, yield, loan-to-value ratios and lending criteria vary by property, lender and market conditions. This is not a return forecast.

The logic is the same one that’s made leverage attractive in super for years — it’s simply commercial property, not residential, that now carries this advantage going forward.

Tax Advantages

We recommend discussing the following with your financial planner or accountant, since they apply regardless of whether your SMSF property is bought with cash, a commercial loan, or through a fractional/unit trust structure — the ATO’s guide to how SMSFs are taxed covers the full detail:

• Capital gains tax — a 10% rate applies if a property is sold in accumulation phase after being held more than 12 months. Sold in pension phase, the rate drops to zero.
• Rental income tax — taxed at a flat 15% in accumulation phase, and tax-free in pension phase. Compare that with rental income held in an individual’s name, taxed at up to 46.5%.
• Salary-sacrifice contributions — pre-tax contributions into super are taxed at 15%, rather than your marginal rate of up to 46.5%.
• Transition-to-retirement strategies — from age 55, you may be able to access a transition-to-retirement pension while still working, receiving concessionally taxed (and eventually tax-free) pension payments.

This is general information, not personal financial advice. Speak with your accountant or financial planner about how these apply to your circumstances.

How We Help

Whether you’re exploring a commercial property loan, planning a cash purchase, or considering a fractional investment structure, we start with your strategy — not a property that happens to be available.

Ask your accountant or financial planner to prepare a Statement of Advice, share it with us, and we’ll identify investment-grade properties that fit it — backed by market research and matched to your fund’s goals, budget, and risk profile.

General information only. SMSF, taxation and borrowing rules are complex and depend on individual circumstances. This page is not personal financial, tax or legal advice. Obtain appropriate advice from licensed financial, tax and legal professionals before borrowing through an SMSF.