SMSF loan

From 10 August 2026, a self-managed super fund can no longer enter a new limited recourse borrowing arrangement to buy residential property. That pathway is closed.

It is narrower than the headlines suggested, and two things are worth being clear about before anything else.

Existing loans are grandfathered. If your fund already holds a residential LRBA, nothing is required of you. No forced sale, no early repayment, no restructure, and no change to how the income or the eventual gain is taxed. The arrangement simply runs its course.

The test was the contract, not settlement. Funds that exchanged a binding contract before 10 August 2026 are unaffected, even where settlement falls after that date. A pre-approval, an accepted offer or a completed bare trust deed on its own was never the same thing as an exchanged contract.

We have written the change up in full, including the background, the exceptions and the questions to put to your adviser: the SMSF residential property borrowing ban, explained.

Two forms of SMSF lending are unaffected by the change, and they are what this page is now about.

SMSF commercial lending. Borrowing to acquire business real property remains available under an LRBA. The property has to meet the business real property test at the time the arrangement is entered into, which the ATO describes as land and buildings used wholly and exclusively in one or more businesses. A shop, a warehouse, a factory, consulting rooms or a farm can qualify. The most common version of this is a business owner whose fund buys the premises their own business trades from.

SMSF residential refinancing. Where your fund entered an LRBA before 10 August 2026, refinancing that arrangement remains available. This is the door most trustees do not realise is still open, and it matters because a grandfathered loan can sit on an uncompetitive rate for years if nobody reviews it.

Refinancing does need care in how it is structured. Guidance permits maintaining or refinancing a pre-commencement LRBA, but sector commentary has urged caution where an arrangement is discharged and re-established, or where the loan amount or the underlying asset changes, on the basis that it may raise the question of whether it is still the same arrangement. That turns on your specific documentation, so it is a question for your SMSF adviser or lawyer before we lodge anything.

A residential property can still be bought inside a fund outright, with the fund's own cash and no borrowing. That is not lending, so it is not something we arrange, but it is worth knowing the option exists.

SMSF applications fall over on documentation far more often than on serviceability. The sequencing below is what separates a clean approval from a month of back and forth.

1. Get the SMSF trust deed right, upfront. The deed has to permit borrowing and permit the arrangement you are proposing. Lenders read it at the start, and a deed that needs updating mid-application costs you weeks. Have your adviser confirm it before we lodge, not after.
2. Have the bare trust deed before formal approval. The holding trust and its trustee need to exist, and the correct entity needs to be named as purchaser on the contract. Getting the purchaser entity wrong is a well-documented source of trouble and can carry stamp duty consequences in some states.
3. Include SMSF member statements upfront. Not on request. Lenders want to see the fund's member balances at the start of the assessment, and supplying them late is one of the most common reasons an SMSF file stalls.
4. Evidence the rollover and the ongoing contributions. Member statements and SMSF bank statements to confirm the rollover has landed or is in train, plus recent payslips for PAYG members or the latest income tax return for directors and self-employed members, so the lender can see contributions continuing rather than assumed.

Assemble those four before an application goes anywhere and the rest of the process is comparatively ordinary.

SMSF lending takes longer than an ordinary purchase because the structure has to be in place before settlement and several parties are involved. Start earlier than you think you need to.

1. Advice first, finance second. Whether the fund should hold property at all is a question for your accountant and financial adviser, not for us. We arrange the loan once that decision is made.
2. Confirm the pathway. For a purchase, whether the property genuinely meets the business real property test. For a refinance, whether the existing arrangement is pre-commencement and how the refinance should be structured to stay within it.
3. Deed and structure. The trust deed checked, the bare trust established, and the purchaser entity named correctly on the contract.
4. Application. We take the fund's financials, the deeds, the member statements and the contract to the lenders actually active in SMSF lending, and they assess against their own criteria.
5. The lender decides. If approved, documents are issued and most lenders require the trustees to obtain independent legal and financial advice before signing. Approval is the lender's decision alone.

Lenders look hard at the fund's liquidity and contribution history. Finance is our job; the investment strategy itself belongs with your accountant and financial adviser, and we work alongside them.

The lender panel is thinner than it was. Sector commentary noted that some lenders withdrew SMSF residential products ahead of the legal commencement date, as happened when comparable measures were proposed in 2019. Knowing who is genuinely still writing this business, and on what terms, is most of the value we add here.

Liquidity is what catches funds out. A property is a single illiquid asset, and the fund still has to meet loan repayments, insurance, rates, maintenance and any pension obligations if a member retires. A vacancy or a rate rise has to be absorbed from cash the fund holds, because you cannot simply top it up beyond the contribution caps.

One structural point for existing residential arrangements: once the loan ends, a new residential LRBA cannot be entered into in its place. That makes any decision to sell or repay worth discussing with your adviser rather than treating as routine.