SMSF Lending Update: New LRBA Rules for Residential & Commercial Property
How the New Rules Affect Your SMSF Strategy.
On 23 June 2026, parliament passed legislation disallowing SMSFs from using limited recourse borrowing arrangements (LRBAs) to purchase residential property. The changes received Royal Assent on 26 June 2026 and take effect from 10 August 2026.
If you were planning to buy property through your SMSF, here’s what you need to know:
- From 10 August 2026, you can no longer borrow using an LRBA to buy residential property. However, existing LRBA arrangements are fully grandfathered.
- Residential property contracts signed before 10 August 2026 will also be grandfathered, even if settlement happens later.
- You can still use your SMSF to buy residential property outright using cash reserves.
The good news is that LRBAs remain available for commercial property, provided it meets the business real property test. That means the property must be used wholly and exclusively for business. Mixed-use properties, vacant land and properties with any private or residential use may be subject to closer scrutiny to ensure they meet the criteria.
Planning to buy a commercial property through your SMSF? Direct Credit Home Loans offers flexible SMSF lending solutions. Contact us on (07) 3726 1124 or email [email protected] to discuss your scenario.
Our experienced staff will assess your application on its merits, not according to rigid criteria. So if you’re credit-worthy, we’ll back you.
We love helping Australians buy property.
Call us on (07) 3726 1124 or email [email protected] to discuss your scenario directly with our credit team.