Last updated: 24 September 2026
The rules for self-managed superannuation fund property borrowing have now changed. This is no longer only a policy announcement or political negotiation.
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026. Schedule 5 of the Act amends the limited recourse borrowing arrangement rules in the Superannuation Industry (Supervision) Act 1993. The relevant SMSF borrowing changes commenced on 10 August 2026.
For Queensland property buyers, business owners and advisers, the key point is this: the change is not a complete ban on SMSFs holding real property. The legal issue is narrower. From commencement, where an SMSF uses a limited recourse borrowing arrangement, commonly called an LRBA, to acquire real property, the asset must be business real property.
What has changed?
Before the amendment, SMSFs were able, subject to strict conditions, to use LRBAs to acquire certain assets, including residential investment property.
From 10 August 2026, the legislation adds a new requirement for real property acquired under relevant LRBA arrangements. If the asset is real property, it must be business real property within the meaning of section 66 of the Superannuation Industry (Supervision) Act 1993.
In practical terms, this means new SMSF borrowing arrangements for ordinary residential investment property will no longer be available in the same way. However, this does not mean every SMSF property transaction is prohibited. It also does not mean that every existing SMSF borrowing arrangement is automatically invalid.
What is an SMSF?
An SMSF, or self-managed superannuation fund, is a private superannuation fund managed by its members or by a corporate trustee controlled by its members. Unlike a large industry or retail super fund, the members are responsible for investment decisions, compliance and administration.
Because an SMSF is still a superannuation fund, its assets must be held and managed for retirement purposes. It is not a private bank account or a general investment vehicle. When property is involved, the structure needs to be considered carefully before a contract is signed.
What is an LRBA?
An LRBA, or limited recourse borrowing arrangement, is a borrowing structure that allows an SMSF to borrow money to acquire an asset, usually with the asset held through a separate holding trust or bare trust structure.
The lender’s rights are generally limited to the asset acquired under the arrangement. Because superannuation funds are generally restricted from borrowing, LRBAs operate as a specific exception to the general borrowing prohibition. That is why the structure is highly technical and should not be treated like an ordinary property loan.
Is SMSF property investment now banned?
No. The new law does not say that SMSFs can never hold real property.
The more accurate statement is that from 10 August 2026, new SMSF LRBA arrangements involving real property must be limited to business real property. This distinction matters. A cash purchase by an SMSF, an existing arrangement, a refinancing of an existing borrowing, or a business real property transaction may raise different issues.
Buyers should avoid relying on broad headlines such as “SMSFs can no longer buy property”. The legal question is not simply whether the SMSF can buy property. The better question is: what type of property is being acquired, how is it being funded, when was the arrangement entered into, and what documents support the transaction?
What is business real property?
Business real property is a specific legal concept under superannuation law. It generally refers to real property used wholly and exclusively in one or more businesses, subject to the relevant statutory definition and exceptions.
Examples may include commercial premises, offices, warehouses, factories or other business premises, depending on the actual use and structure. However, not every property marketed as “commercial” will necessarily satisfy the business real property test. Mixed-use premises, vacant property, residential components and related-party arrangements may require closer review.
This is one reason legal drafting and due diligence are important. A transaction should not proceed merely because a property appears commercial from a sales listing. The contract, title, permitted use, lease documents, tenant arrangements and business use should all be considered.
A shopfront advertised as commercial: will it satisfy the LRBA rule?
Imagine an SMSF proposes to borrow to buy a Queensland shopfront. The agent calls it commercial, but the property includes an apartment or has no current business tenant. The marketing label does not decide whether the real property is business real property under the superannuation rules. The actual use of the premises, lease, tenant’s business, mixed-use areas and timing of the arrangement all need assessment before the fund signs and borrows.
The restriction has applied to relevant new limited recourse borrowing arrangements since 10 August 2026. A pre-commencement borrowing or qualifying refinancing, or an acquisition arrangement entered before commencement but completed later, may fall within the statutory transition. Do not assume that an unsigned proposal or a post-date restructure is protected. Review the purchase contract, loan, holding trust and lease as a set, with the accountant and licensed financial adviser. See Schedule 5 of the enacted Commonwealth Act and ATO guidance.
What about existing SMSF borrowing arrangements?
The Act contains transitional provisions. The new requirement applies to arrangements entered into on or after commencement. It does not apply, to the relevant extent, to maintaining or refinancing a borrowing under an arrangement entered into before commencement.
The Act also preserves certain acquisitions where the asset is acquired under an arrangement entered into before commencement, even if settlement happens after commencement.
This is why it is too simplistic to say “existing arrangements are unaffected” without checking the documents. The relevant questions include:
- When was the borrowing arrangement entered into?
- When was the acquisition arrangement entered into?
- Has the contract already been signed?
- Is the transaction still conditional?
- Is the buyer relying on finance approval?
- When is settlement due?
- Are the bare trust, loan and purchase documents aligned?
For transactions in progress, timing and documentation are now critical.
What should Queensland buyers check before signing?
If you are considering buying Queensland property through an SMSF structure, the legal review should happen before signing, not after.
At a minimum, buyers and advisers should check:
- whether the buyer is the correct entity;
- whether the proposed acquisition involves an SMSF and an LRBA;
- whether the property is residential property or business real property;
- whether the contract allows enough time for finance approval and SMSF documentation;
- whether the finance condition is suitable for the structure;
- whether settlement timing creates risk under the commencement date;
- whether any related-party lease is properly documented;
- whether rent is on arm’s length commercial terms;
- whether GST, transfer duty or land tax issues may arise;
- whether FIRB approval is relevant for a foreign person or foreign-controlled structure.
SMSF property transactions are not ordinary residential conveyancing matters. The documents need to work together: the contract, loan, holding trust, trustee structure, lease and settlement arrangements should be consistent.
Why this matters for business owners
Some business owners use SMSF structures to acquire premises used in their business, such as offices, warehouses, clinics, workshops or industrial units. The new law does not remove the need for careful review. In many cases, it makes the review more important.
Even where a property appears to be business real property, buyers should still consider whether the use, lease and structure satisfy the relevant rules. Where a related business leases premises from an SMSF, the arrangement should generally be documented on commercial terms, with market rent and proper lease obligations.
From a legal perspective, the issue is not whether the property is a good investment. The issue is whether the transaction documents support the intended structure.
What Ensure Legal can assist with
Ensure Legal does not provide financial product advice, investment advice or tax advice. SMSF buyers should obtain advice from their accountant, SMSF adviser or licensed financial adviser before proceeding.
Where the transaction involves Queensland property, Ensure Legal can assist with the property law aspects, including:
- contract review before signing;
- review of buyer entity and execution arrangements;
- special conditions for SMSF-related transactions;
- commercial property purchase review;
- lease review for business premises;
- settlement risk and timing issues;
- coordination with accountants, brokers and financial advisers;
- Queensland transfer duty and property settlement considerations.
The key is to identify issues early. Once a contract has been signed, the buyer’s options may be more limited.
Practical takeaway
The SMSF borrowing changes are now law. From 10 August 2026, new LRBA arrangements involving real property will need to be limited to business real property.
For buyers, the practical question is not simply “Can my SMSF buy this property?” It is:
- What type of property is it?
- Is borrowing involved?
- When was the arrangement entered into?
- Do the contract, finance and settlement documents support the structure?
Before signing a Queensland property contract through an SMSF structure, speak with your accountant or licensed financial adviser, then have the property contract and transaction documents reviewed by a lawyer.
Need help reviewing a Queensland property contract involving an SMSF structure? Contact Ensure Legal before signing or before settlement to discuss the property law aspects of the transaction.
This article is general information only and is not legal, financial, tax or investment advice. SMSF rules are technical and fact-specific. You should obtain advice from appropriately qualified advisers before entering into any SMSF property transaction.
FAQs
Can an SMSF still buy property after the new law?
Yes, but the answer depends on the type of property, the funding structure and the timing of the arrangement. The new law restricts new LRBA arrangements involving real property unless the asset is business real property.
Does the law ban SMSFs from buying residential property outright?
The new amendment is directed at LRBA borrowing arrangements. A different analysis may apply where an SMSF acquires property without borrowing. Buyers should obtain SMSF, tax and legal advice before proceeding.
When do the new SMSF LRBA property rules start?
Schedule 5 of the Act commences on 10 August 2026.
Are existing SMSF LRBAs affected?
The Act includes transitional provisions for arrangements entered into before commencement, including certain refinancing and acquisition arrangements. Whether a particular transaction is protected depends on the documents and timing.
What is business real property?
Business real property is a specific term under superannuation law. It generally refers to real property used wholly and exclusively in one or more businesses, subject to the statutory definition. A property being described as “commercial” is not always enough.
Should I get legal advice before signing an SMSF property contract?
Yes. If the transaction involves an SMSF, borrowing, commercial property, a related-party lease or settlement timing issues, the contract should be reviewed before signing.
