New SMSF Restrictions: What the 2026 LRBA Rule Changes Mean for Property Investors
- Jul 9
- 2 min read
By Ally Hornibrook and Chantelle Shepherd
As you may have seen in the news, new rules are coming into effect that will stop Self-Managed Super Funds (SMSF) from entering into new limited recourse borrowing arrangements (LRBAs) for residential property loans.
Specifically, if your SMSF wants to borrow to purchase residential property, you must enter into the contract before 10 August 2026 for the loan to be allowed. Notably, this does not apply to commercial properties.
How the New Transition Rules Protect Existing Investments
Contracts Signed Before 10 August 2026: If your contract is fully executed before this deadline, your arrangement falls safely under the transition safety net. This means you can confidently proceed with settlement, finalize your loan, and maintain your bare trust structure as normal—even if settlement takes place after the new laws come into effect.
Contracts Signed On or After 10 August 2026: if you enter into a contract on or after this date, your SMSF will no longer be permitted to use a residential LRBA structure to secure the property.
Important Dates to Remember
26 June 2026: Parliament passed the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 which gave assent to these changes, thereby commencing the 45-day countdown.
26 June – 9 August 2026: Your existing LRBA may continue as normal and your SMSF can enter into new residential LRBAs provided that the contract is fully executed.
10 August 2026: Your SMSF can no longer enter into new residential LRBAs, but all existing residential LRBAs may continue on foot and receive grandfathered tax treatment.
How We Can Help
If you have any questions, please do not hesitate to reach out to us to discuss how we can assist you. Shepherd Property Lawyers has experience with all types of investors and would be happy to help.
Please Note: For any financial or taxation advice for your SMSF, LBRA, or residential purchase, please speak to your accountant or financial advisor.
