From 10 August 2026, significant changes will affect how Self Managed Super Funds (SMSFs) can invest in residential property using borrowings.

These changes will have a direct impact on trustees, accountants and advisers who are considering purchasing property through an SMSF.

What is changing?

From 10 August 2026, SMSFs will generally no longer be permitted to use a Limited Recourse Borrowing Arrangement (LRBA) to acquire residential property.

This means that, unless transitional provisions apply, an SMSF will generally be unable to obtain a new loan to purchase residential real estate.

However, the changes do not prevent an SMSF from purchasing residential property outright using existing fund cash.

What about commercial property?

The changes do not prevent SMSFs from borrowing to acquire eligible business real property (commercial property).

Subject to the legislative requirements being satisfied, SMSFs can continue to use LRBAs to acquire qualifying business real property.

Examples include:

• Offices
• Factories
• Warehouses
• Retail shops
• Industrial properties
• Commercial premises used wholly and exclusively in one or more businesses

Existing arrangements

SMSFs that already have an existing residential LRBA, or that qualify under any applicable transitional provisions, may not be affected in the same way.

Trustees who entered into arrangements before the commencement date should seek professional advice regarding how the new legislation applies to their circumstances.

What does this mean for SMSF audits?

For trustees and accountants preparing future SMSF financial statements and audits, it will become increasingly important to understand:

• whether a residential property was acquired before or after the legislative changes;
• whether borrowing was involved;
• whether any transitional provisions apply; and
• whether the investment structure complies with the new legislation.

Auditors will continue to review compliance with the Superannuation Industry (Supervision) Act and associated regulations as part of the annual audit process.

Planning ahead

If your SMSF is considering purchasing property using borrowings, it is important to understand how these legislative changes may affect your options.

Early planning and obtaining appropriate professional advice can help ensure your fund remains compliant.

Need an independent SMSF audit?

Just SMSF Audits provides independent SMSF audits for accountants and SMSF trustees throughout Australia, with fast turnaround times and fixed pricing.

If you have any questions regarding your upcoming SMSF audit, feel free to contact our team.