The Clock Is Ticking... on SMSF Property Loans
If you've ever heard someone say "I bought an investment property through my super," this article is about the door that just closed behind them (and every other SMSF investor!)
From 10 August 2026, self-managed super funds can no longer take out a new loan to buy residential property.
The Good Ole Days:
Since 2007, SMSFs have been allowed to to obtain finance to buy property using something called a Limited Recourse Borrowing Arrangement, or LRBA.
The structure worked like this: your super fund put down the deposit, a lender financed the rest, and the property sat in a separate holding trust until the loan was repaid. "Limited recourse" meant that if things went wrong, the lender could only claim the property itself, not the rest of your super.
For the right person, usually someone with a healthy super balance, stable income and a long runway to retirement, it was a way to hold a leveraged property asset inside the most tax-effective structure in the country.
SMSF loans made up less than 1% of residential property borrowing in Australia.
So, What's changed?
Great question!
As part of a deal with the Greens to pass its budget tax package, the Labor government banned new residential LRBAs. The bill passed Parliament on 25 June 2026.
Here's what that actually means:
New residential borrowing is gone. From 10 August 2026, an SMSF cannot enter a new LRBA to buy residential property.
Existing loans are safe. The ban is prospective only. If your fund already holds a property under an LRBA, nothing is being unwound and you're not being forced to sell. Refinancing is still permitted, though how many lenders stay in that space is the million dollar question.
Commercial is still on the table. SMSFs can still borrow to buy business real property, think commercial premises used wholly in a business. This is where a lot of SMSF lending attention will very likely shift.
Cash purchases are untouched. A fund with enough money can still buy residential property outright. The ban is on borrowing, not on owning.
Expiry dates
This is the part that matters right now!
The ban takes effect on 10 August 2026. To get in under the old rules, an SMSF needs to have exchanged contracts by 9 August 2026, with the fund, the bare trust and the finance all in place behind it.
That is not a lot of runway. Setting up an SMSF, establishing a holding trust, getting loan approval and exchanging on a property is normally a months-long process, and every lender and lawyer in this space is about to be dealing with the same deadline rush.
If this strategy was already on your radar, the window is closing fast and rushing a super decision to beat a deadline is exactly how people end up in structures that don't suit them. If it wasn't on your radar, well you probably haven't missed much: it was always a niche strategy for a specific type of investor.
Either way, the era of borrowing inside your super to buy a house is coming to an end (for now!).
What replaces it: cash purchases, commercial property, or nothing at all depending entirely on your individual numbers.
If buying a property in your SMSF is something you;ve been considering, you need to decide quickly if it's something you want to do.
Feel free to book a call if you want to discuss how much you could be eligible to borrow by visiting www.aprilsix.com.au
Eshanee Collins is the founder and lead Mortgage Broker of April Six. She helps first home buyers and first time investors navigate each stage of the home buying process.
April Six is a member of the MFAA and authorised under Purple Circle Financial Services ACL 419372.
This article is general information only and doesn't take your personal circumstances or the rules of any super fund into account. Speak to a qualified accountant, financial adviser, SMSF specialist or mortgage broker before making any decisions about superannuation or borrowing.