Incoming BAN on SMSFs borrowing for Residential Property

Since 2007, an exception has been made to allow Self-Managed Superannuation Funds (SMSFs) to borrow under strict Limited Recourse Borrowing Arrangements (LRBAs) to purchase residential property. This is changing. The Federal Government has introduced legislation, in support of its broader Budget package, that will remove the use of borrowing by SMSFs for residential property purchases, commencing around mid-August 2026.

What does this mean for SMSF trustees?

Once the new legislation is implemented, SMSFs will no longer be able to borrow to purchase residential property, regardless of whether it is:

What will happen to existing LRBA loans?

The new legislation will not be retrospective, meaning existing property loans held by SMSFs may continue, and trustees will be permitted to refinance those loans if required. Where a contract for a residential property has been exchanged prior to the commencement date, it is expected that transitional provisions will be applied even if settlement occurs after the commencement date.

What investment options remain to SMSF trustees?

Despite the incoming legislative changes, SMSFs will continue to be able to:

When will the new legislation’s rules become enforceable?

The new legislation will come into effect around mid-August 2026, 45 days after the legislation receives Royal Assent. Until then, the current LRBA borrowing rules for SMSFs remain in effect.

Next Steps

This legislation marks the end of leveraged residential property investing through SMSFs. SMSF trustees may still invest in residential property, but without the need to borrow to do so. NOW is the time to review your SMSF investment plan and strategy. Ask us at YML Super Solutions to help you with understanding the implications and explore alternative investment opportunities for your SMSF.

How can YML help?

Talk to our YML Super Solutions Team today to see how YML Group can assist you with your SMS. For more information, view our website and contact us on (02) 8383 4444 or by using our Contact Us page on our website

Interest Rates are easing – Is it time to refinance?

Our lenders are sharpening their interest rates.

Home loan rates below 6.00% p.a. variable may be available to you, and, in some cases, eligible borrowers may also receive a cash gift of up to $4,000, subject to lender terms and conditions.

Reach out to us NOW and learn more about how we can help you by calling us on (02) 8383 4466 and requesting a callback or making an appointment with the YML Finance Team.

How can YML help?

Talk to our YML Finance Team today to see how YML Group can assist you with refinancing your loan. For more information, view our website and contact us on (02) 8383 4466 or by using our Contact Us page on our website