SMSF property lending has changed

For a new arrangement entered into on or after 10 August 2026, an LRBA involving real property must generally relate to business real property. An ordinary residential investment property will not usually meet that test. Existing and transitional arrangements can be treated differently, so obtain licensed financial, tax and legal advice before acting.

Potentially. A new LRBA may still be considered where the real property satisfies the legal definition of business real property, the fund and transaction comply with the relevant rules, and the application meets lender policy. Classification and compliance should be confirmed by appropriately qualified advisers.

Broadly, it is a freehold or leasehold interest in real property used wholly and exclusively in one or more businesses. A property being described as commercial does not automatically settle the question. Have the actual use, ownership and lease arrangements checked professionally.

The 2026 transitional rules preserve refinancing of certain borrowing arrangements entered into before commencement. A refinance still depends on the existing structure, the proposed changes and lender policy. We can assess lending options after your legal or SMSF adviser confirms the arrangement’s status.

Transitional protection may apply where the relevant acquisition arrangement was entered into before commencement, even if settlement occurs later. Contract conditions, amendments and related documents can affect the position, so have an SMSF solicitor confirm it before relying on the transition.

This can be possible for qualifying business real property where the transaction and lease comply with the SMSF rules and are maintained on arm’s-length terms. Obtain financial, tax and legal advice on the structure and have the property classification confirmed before proceeding.

An LRBA is a limited recourse borrowing arrangement. In broad terms, it is a specialised structure under which an SMSF borrows to acquire a permitted asset held through a separate holding trust, with the lender’s recourse generally limited to that asset. The legal and lending requirements are detailed.

There is no single percentage that applies to every lender or property. SMSF loans can require a larger contribution than standard property loans, and lenders also assess purchase costs, repayments, contributions, rental income and remaining liquidity. We can model the lending position, while your adviser assesses the strategy and risk.

Requirements vary, but lenders commonly request the SMSF deed, trustee and holding-trust documents, member and contribution information, fund financials, bank statements, the contract and lease, property details, valuation information and identification. We provide a lender-specific checklist before submission.

Generally, residential property held by an SMSF cannot be lived in or rented by a member or related party. The exact compliance position should be confirmed with an appropriately qualified SMSF adviser or lawyer.