If you’ve been considering purchasing a residential investment property through your Self-Managed Superannuation Fund (SMSF) using borrowed funds, time may be running out.
Recent changes to the law mean that, from 10 August 2026, SMSFs will generally no longer be able to use a Limited Recourse Borrowing Arrangement (LRBA) to acquire ordinary residential investment property.
While this isn’t a reason to rush into purchasing property, it is an important deadline for SMSF trustees who were already planning to acquire residential property through their fund.
What is changing?
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 has introduced significant changes to the rules governing SMSF borrowing arrangements.
Until now, SMSFs have been able to use an LRBA to purchase a single acquirable asset, provided the arrangement satisfied the strict requirements of the superannuation legislation. In many cases, this has allowed trustees to purchase residential investment properties within their SMSF.
Once the new rules commence, that opportunity will be significantly restricted.
Going forward, SMSFs will generally only be able to use an LRBA to acquire business real property, meaning ordinary residential investment properties—such as houses, units and apartments purchased for residential rental purposes—will no longer qualify.
Commercial property that meets the legislative definition of business real property may still be eligible, provided all other legal requirements are satisfied.
Why the deadline matters
The legislation received Royal Assent on 26 June 2026, with the new restrictions commencing on 10 August 2026.
Importantly, the legislation includes transitional provisions that appear to protect acquisitions where the relevant acquisition arrangement is entered into before the commencement date, even if settlement occurs afterwards.
For many purchasers, this means that entering into a binding contract before 10 August 2026 could be the critical step.
However, every SMSF transaction is different, and the timing, documentation and purchasing structure all need to be carefully considered.
Getting the purchasing structure right
Unlike a standard residential property purchase, buying property through an SMSF using an LRBA involves additional legal and conveyancing requirements.
Before contracts are signed, trustees should ensure the correct ownership structure has been established. This often includes:
- establishing the appropriate bare trust or holding trust;
- ensuring the correct purchaser is named in the Contract of Sale;
- confirming trustee details are accurate;
- coordinating lender requirements;
- preparing supporting legal documentation; and
- ensuring the purchase aligns with the fund’s investment strategy and borrowing arrangements.
Mistakes made at the contract stage can be difficult—and in some cases impossible—to correct after signing.
For this reason, engaging your conveyancer and legal advisers early in the process is essential.
Should you rush to buy?
Not necessarily.
An LRBA is a significant long-term financial commitment and should never be entered into simply because a legislative deadline is approaching.
Before proceeding, trustees should carefully consider whether:
- the acquisition is consistent with the SMSF’s investment strategy;
- the fund has sufficient cash flow to meet loan repayments and ongoing expenses;
- the investment is appropriate for the members’ retirement objectives;
- the loan is on commercial, arm’s-length terms;
- the property complies with the superannuation rules;
- all financing, taxation and insurance implications have been considered; and
- the transaction has been properly structured from the outset.
Professional advice remains critical throughout the process.
Existing SMSF property loans
The new legislation is prospective and is not intended to affect existing residential property LRBAs entered into before the commencement date.
The legislation also appears to permit refinancing of protected existing arrangements in certain circumstances.
If your SMSF already owns residential property under an LRBA and you’re considering refinancing, changing lenders or restructuring your borrowing, it’s important to obtain legal advice before making any changes.
How eConvey can help
At eConvey, we regularly assist purchasers with the conveyancing aspects of SMSF property transactions.
These transactions require close coordination between conveyancers, lenders, accountants and legal advisers to ensure contracts, settlement arrangements and ownership structures are handled correctly from the very beginning.
Where legal advice or SMSF-specific documentation is required—including Limited Recourse Borrowing Arrangements, bare trust documentation, trustee structures or SMSF compliance advice—we work closely with our sister company, Hill Legal, to help ensure every aspect of your transaction is properly documented.
With the 10 August 2026 deadline fast approaching, early planning is more important than ever.
If you’re considering purchasing property through your SMSF, contact eConvey now on 03 5976 2700 to discuss the conveyancing process and transaction requirements. For advice on SMSF borrowing structures, legal documentation and compliance, our colleagues at Hill Legal are ready to assist on 03 5976 6500.