SMSF property borrowing for residential property – now restricted
As of 10 August 2026, self-managed super funds can no longer enter a new limited recourse borrowing arrangement (LRBA) to buy real property unless that property is business real Property – broadly, property used wholly and exclusively in carrying on a business.
In practice, this closes the door on SMSFs borrowing to buy standard residential investment
properties going forward.
A few important qualifications that get lost in the general commentary on this change:
• Existing residential LRBAs are grandfathered; you don’t need to unwind anything
already in place
• Refinancing an existing LRBA is still permitted, including with a different lender
• Binding contracts exchanged before 10 August 2026 are still protected, even if
settlement or the loan itself happens afterwards
• LRBAs to acquire business real property remain available, as does buying property
outright with the fund’s own cash
If you’ve been considering an SMSF property purchase and haven’t yet exchanged
contracts, this change likely affects your options – worth a conversation before you take
further steps.
Division 296 — the $3 million super balance tax
Division 296 is also now in effect, applying from 1st July 2026. It adds extra tax on
superannuation earnings attributable to the portion of an individual’s total super balance
above $3 million, calculated on realised earnings rather than unrealised (paper) gains.
The first assessments won’t be issued until after 30 June 2027.
This measure affects a small proportion of super fund members, broadly, those with total
balances well above the $3 million mark. If that’s not you, there’s nothing to action here. If it
might be you, or you’re not sure where your total balance sits across all your super interests,
it’s worth a specific conversation with Accounting Services Australia, rather than trying to apply
a general explainer to your own numbers.
What to do next
Neither of these changes requires action from most business owners and clients. But if
you’re mid-process on an SMSF property purchase, or your super balance is approaching
the higher thresholds, get in touch with our team at Accounting Services Australia and we’ll work
through exactly.
