Since 10 August 2026, a lot of trustees have quietly shelved the idea of holding property in their self-managed super fund. The headlines made it sound final: SMSF property borrowing banned. But the change is narrower than many people think, and for trustees interested in brand-new property, several doors remain open.
This is general information about how the rules work. It is not personal financial or tax advice.
What actually changed on 10 August
The government announced the change on 23 June 2026 as part of its deal with the Greens to pass the broader tax reform package. The legislation received Royal Assent on 26 June and the new rule started 45 days later, on 10 August.
From that date, an SMSF can only enter a new limited recourse borrowing arrangement (LRBA) to buy real property if the property is business real property. Broadly, that means land and buildings used wholly and exclusively in a business. A residential investment property does not meet that test, so new residential LRBAs are off the table.
Three things are protected:
- Existing residential LRBAs continue as they are.
- Refinancing an existing residential LRBA on substantially the same terms remains available.
- Binding contracts signed before 10 August are generally protected, even where settlement happens later.
One detail is worth knowing: the ban makes no distinction between new and established homes. A brand-new townhouse is treated the same as a 1970s apartment when it comes to LRBA borrowing.
What did not change
The ban targets borrowing, not ownership. An SMSF can still buy and hold residential property. The usual rules still apply: the property must meet the sole purpose test, the fund cannot buy residential property from a member or related party, and members and their relatives cannot live in it or rent it.
The tax settings that make property inside super attractive also remain. Fund income in accumulation phase is generally taxed at 15 per cent, and earnings supporting a retirement-phase pension can be tax-free up to the transfer balance cap.
Five routes still open
1. Buy with cash. The simplest option. The fund pays the full price plus costs from its own balance. No lender, no bare trust, no LRBA rules.
2. Pool with other funds through an unrelated unit trust. Several unrelated SMSFs can invest in a unit trust that buys the property. Where the trust is genuinely unrelated to each fund, the trust itself can borrow, and the investment is not caught by the in-house asset rules. This needs careful structuring.
3. Co-invest through a non-geared related unit trust. A fund can invest alongside members or family through a unit trust that meets strict conditions under the SIS Regulations. The catch: the trust cannot borrow.
4. Use an LRBA for business real property. If you run a business, or want commercial exposure, LRBA borrowing is still available for property that meets the business real property definition.
5. Pair your fund with a new build in your own name. Many investors are now running two tracks: the SMSF holds lower-tax assets, while a new build outside super is financed personally.
We will cover each of these in more detail in upcoming posts.
Why brand-new property keeps coming up
Two reasons. Inside super, a new property gives the fund the full depreciation schedule, low early maintenance and builder warranties, which all help when cash flow and liquidity matter. Outside super, the 2026–27 Budget reforms limit negative gearing on residential property bought after Budget night to eligible new builds, which makes new supply the policy-favoured choice for investors.
Keep it in perspective
Residential property makes up less than 6 per cent of total SMSF assets, according to ATO data as at March 2026. Property is not right for every fund. A single property can dominate a fund's balance, it cannot be sold in pieces, and SMSFs carry real running costs. Be wary of anyone who suggests setting up an SMSF purely to buy a property. The decision should start with your retirement plan, not with a listing.
What to do next
- Speak with an SMSF specialist accountant. Ask which of the five routes suits your fund balance, membership and investment strategy, and whether your trust deed allows it.
- Talk to a licensed mortgage broker if you are considering a pooled trust, commercial LRBA or a personal new-build loan. Lender appetite differs across each.
- Get independent property analysis. EWC sources new properties and coordinates the property and finance side. You can book a free call or see how we work on the services page.
General information only, not personal financial advice. Speak with a licensed adviser before acting.