Can you refinance your SMSF property loan?
Under current law, refinancing an existing SMSF LRBA is permitted. You can switch lenders, change loan terms, or negotiate a better interest rate. However, the legislated ban on new SMSF residential LRBAs creates significant uncertainty: will refinancing be treated as a new borrowing that falls outside any grandfathering protection?
The current position
Refinancing an LRBA is currently:
- Legally permitted under superannuation law (with appropriate documentation)
- Common practice — SMSFs refinance for better rates as interest rate cycles change
- Treated as a continuation of the existing borrowing arrangement by most SMSF advisors
The concern under the legislated changes
If new residential SMSF LRBAs are banned from a commencement date:
- Any refinancing after that date could potentially be characterised as entering into a "new" LRBA
- If it is treated as a new LRBA, it would not benefit from grandfathering and may be prohibited
- This would effectively lock existing borrowers into their current loan forever — which is not commercially reasonable
Industry advocacy
SMSF industry bodies (including the SMSF Association) are actively advocating for legislation to confirm that:
- Refinancing an existing residential LRBA (within the original loan amount) is not treated as a new LRBA
- Commercial refinancing at market rates preserves grandfathered status
Practical advice
- Do not refinance in a hurry until the legislative position is clear — a refinancing now that is later deemed to break grandfathering could be very costly
- If you have a fixed rate expiring, get urgent specialist advice about whether to refinance before the commencement date or wait for legislative clarity
- Keep full documentation of your current LRBA, including the original establishment date, loan amount, and terms
Depreciation and the refinancing decision
Refinancing affects your interest expense but not your depreciation claims. Whether you stay with your current lender or refinance to a better rate, your Division 40 and Division 43 depreciation continues unchanged.