Can your SMSF still buy residential property?
Yes, with an important distinction. The legislated changes to SMSF property rules specifically target new borrowing arrangements for residential property — not cash purchases. Your SMSF can still invest in residential property using its own funds.
What the ban covers
Under the legislated 2026 reform package:
- New Limited Recourse Borrowing Arrangements (LRBAs) for residential property are prohibited after the commencement date
- This means your SMSF could no longer take out a loan to buy a residential investment property
- Existing LRBAs for residential property are grandfathered and can continue
What remains permitted
- Your SMSF can purchase residential property using its own cash — no borrowing required
- Your SMSF can continue to own and manage any existing SMSF residential property
- Your SMSF can service and repay existing LRBAs as contracted
- Commercial property — SMSFs retain the ability to borrow to purchase commercial property
The practical implication
For SMSFs with sufficient cash balances, residential property investment continues as an option. The change removes the ability to leverage up using borrowed funds for new residential purchases. This means:
- Larger SMSFs with cash can still buy residential property
- Smaller SMSFs that need borrowed funds to afford a residential property may lose access to this strategy for new purchases
- All SMSFs retain access to commercial property with borrowing
Is the ban confirmed?
The ban is legislated as part of the 2026 reform package. The commencement date, the precise scope of what is prohibited, and the grandfathering arrangements are set out in the legislation.
What to do now
If you are considering an SMSF residential property purchase and intended to use a LRBA, seek urgent advice from an SMSF specialist. Purchasing before the commencement date may preserve access to borrowing for that specific property.