What changed?
As part of the Labor-Greens agreement following the May 2026 Federal Budget, the government is introducing a ban on new Self-Managed Super Fund (SMSF) limited recourse borrowing arrangements (LRBAs) for residential property.
This means that SMSFs planning to borrow money to purchase residential property will be affected by this change. The ban targets new arrangements — not the existence of property in an SMSF.
What is an LRBA?
A limited recourse borrowing arrangement is a structure that allows an SMSF to borrow money to purchase an asset — such as property — where the lender's recourse is limited to the asset itself. LRBAs have been commonly used by SMSFs to purchase both residential and commercial investment properties.
Does this mean SMSFs can't own property?
No. SMSFs may still hold property. The change targets new borrowing arrangements for residential acquisitions — not existing property held outright within the fund.
What about existing SMSF property loans?
Existing LRBAs are grandfathered under the change. However, investors should not assume this protection applies without seeking specific advice from their SMSF adviser. The legislation sets the exact commencement and transitional rules.
What about commercial property?
Commercial property borrowing is not the target of this change. However, SMSF rules are complex and investors should seek specific advice before proceeding with any new SMSF borrowing arrangement.
What should SMSF investors do?
- Do not sign new contracts before seeking advice from your SMSF adviser, accountant, lawyer and lender.
- Confirm whether your existing arrangements are grandfathered.
- Confirm commencement dates with your adviser under the legislated rules.
- Keep depreciation schedules and CGT cost base records up to date for existing SMSF properties.
For the full context of the 2026 Budget reforms affecting property investors, see our 2026 Property Tax Changes guide.