SMSF lending
Can you still borrow in an SMSF to buy commercial property?
Yes. SMSF borrowing to purchase commercial property remains available. The Treasury Laws Amendment (Tax Reform No. 1) Bill 2026, which received Royal Assent on 26 June 2026, bans SMSFs from entering new limited recourse borrowing arrangements for residential property. It does not apply to commercial property or business real property. If you are a business owner who has been weighing whether your SMSF could borrow to purchase commercial premises, that option is still on the table.
What changed in June 2026, and when does it take effect?
The Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 passed both houses of Parliament and received Royal Assent on 26 June 2026. A 45-day commencement window runs from that date, placing the new rules in effect around 10 August 2026.
The legislation prohibits SMSFs from entering new limited recourse borrowing arrangements (LRBAs) for residential property. It was introduced as a condition of Greens Senate support for the CGT and negative gearing overhaul contained in the same Bill.
Existing residential LRBAs are grandfathered. The trigger for that protection is the date of the acquisition arrangement, contract exchange, not the date of settlement. A residential LRBA where contracts were exchanged before commencement is protected even if settlement occurs after that date.
| LRBA type | From around 10 August 2026 |
|---|---|
| New SMSF LRBA, residential property | Prohibited |
| Existing SMSF LRBA, residential property | Grandfathered (contract exchange before commencement) |
| New SMSF LRBA, commercial property | Unaffected, remains available |
What does the commercial property carve-out mean for business owners?
The legislation leaves commercial property, often called business real property, outside the scope of the ban. An SMSF can still enter a new LRBA to purchase commercial property after the new rules commence around 10 August 2026.
One of the more common applications of this structure is where business owners arrange for their SMSF to purchase the commercial premises the business operates from. The business then leases those premises from the SMSF. The arrangement can allow business owners to build an asset inside their superannuation fund rather than paying rent to a third party, though this is a high-level description of a structure that has specific compliance requirements and does not suit every situation.
Whether an SMSF structure is appropriate for your circumstances depends on your SMSF trust deed, your individual tax position, the superannuation rules governing related-party transactions, and a range of other factors specific to you. That assessment belongs with a licensed financial adviser and your accountant. FGO's role is on the lending and finance side once those structural decisions have been made. Read our broader approach to commercial finance.
What should you do before and after 10 August?
For commercial property, nothing changes when the new rules commence around 10 August. SMSF borrowing for commercial property continues under the existing LRBA rules. The commencement date is relevant only for residential property.
A few practical points apply if you are considering an SMSF commercial property purchase now. The structural groundwork, whether the SMSF is appropriately established, whether the trust deed permits borrowing, and how the bare trustee arrangement is set up, all needs to be in place before a purchase can proceed. That work involves your financial adviser, your accountant, and a solicitor experienced in SMSF law.
For anyone who holds an existing residential LRBA and is concerned about the new rules: if contracts were exchanged before commencement, the arrangement is grandfathered and no action is required to maintain that protection. Confirm the exchange date with your solicitor if there is any uncertainty, and see the 9 August 2026 deadline explainer for the exchange-versus-settlement detail.