The short version
- Since 10 August 2026, an SMSF can't take out a new limited recourse borrowing arrangement (LRBA) to buy residential property. New borrowing is limited to property that passes the business real property test.
- The change came in through the Treasury Laws Amendment (Tax Reform No. 1) Act 2026. It got Royal Assent on 26 June 2026 and started 45 days later.
- Existing loans are safe. A contract you exchanged before 10 August 2026 still stands even if it settles later, and existing residential LRBAs can still be refinanced.
- The commercial door is still open. An SMSF can still borrow to buy business premises, such as an office, a warehouse, a shopfront or a factory, and lease it to a related business at market rent.
- Expect around 65% LVR, sometimes 70%, from a specialist lender panel. The rate sits above a standard commercial investor loan, not level with it.
For most of the last decade the SMSF property conversation defaulted to residential. Buy an investment unit inside super, borrow against it, let the rent and the contributions carry the loan. That path closed on 10 August 2026. What didn't close is the structure that was usually the better one for a business owner anyway: buying your own premises through your fund. This covers what the law now asks for, how the structure works, and what the finance looks like today. It's written for business owners and the accountants who advise them. Aurelius Capital arranges the SMSF loan across a specialist panel. The fund strategy sits with your accountant or SMSF adviser, and the two jobs work best in the same room.
What changed on 10 August 2026
The old rule let an SMSF borrow to buy almost any single asset it was allowed to hold, residential property included. The new law adds a condition: where the asset is real property, it has to be business real property. Residential property no longer qualifies for new borrowing inside a fund.
The change only applies going forward, which matters. If your fund exchanged contracts before 10 August 2026, the deal still stands even if settlement lands months later. Loans already running on that date keep running, and you can still refinance them. Moving an existing residential LRBA to a sharper rate isn't caught by the ban. A fund can also still buy residential property outright from its own cash. What it can't do is borrow to get there.
For a business owner, none of this touches the play that was always the more useful one. The commercial structure is untouched, and the residential change has pushed a lot of accountants to look at it properly for the first time.
Business real property: what the test asks for
Business real property has a specific meaning in the SIS Act, and the whole structure now turns on it. Two things have to be true.
First, the fund needs the right kind of interest in the land: a freehold or leasehold interest, or a qualifying interest in Crown land. Second, the land has to be used wholly and exclusively in one or more businesses. The business doesn't have to be yours. A commercial property leased to an unrelated tenant running a business on it still qualifies.
"Wholly and exclusively" is the part people get wrong. A property that's half shop and half residence usually fails, because the home part isn't business use. Farms get treated more kindly: a working farm still qualifies even with a house on it, as long as farming is the main use and the private residential area stays within two hectares. And a property that looks residential can pass if it's used entirely in a business, like a converted terrace run as a professional practice.
Buying your business premises through super
This is the structure the ban leaves fully intact. The fund borrows under an LRBA to buy commercial premises. A separate holding trust, called a bare or custodian trust, holds the legal title to that one property while the loan runs, and the SMSF holds the beneficial interest. If the loan defaults, the lender can only come after that one property. The rest of the fund's assets sit behind a wall. That limit is what "limited recourse" means.
The reason this works so well for an SME is the related-party angle. The SIS Act normally stops a fund buying assets from its members or their related parties. Business real property is a stated exception when it's bought at market value. So you can sell your existing premises into your own fund, or the fund can buy new premises, and then lease it straight back to your trading company. Rent flows from the business into the super fund, where it's taxed at the lower super rate, and it helps pay down the loan alongside contributions. Over the term the fund ends up owning the building, and the rent has done most of the work. It's the same buying decision covered on our commercial mortgages page, run through super instead of the operating company.
The market-rent rule is not optional
The lease-back only works if the rent is real. Your business has to pay the fund rent at an independently assessed market rate, under a written lease, on the terms an outside tenant would get. Paying under the rate to help the business cash-flow, or over it to tip more into super, is a breach the auditor will flag and the ATO can act on. Get the market valuation done and keep the lease current. This is where your accountant earns their fee, and it's worth putting the rent review in the diary rather than trusting memory.
What the finance looks like
SMSF commercial lending is a specialist part of the market, not a big-four product on a rate board. A handful of non-bank and second-tier lenders write most of it, Liberty, La Trobe, Thinktank and RedZed among them. The panel matters, because appetite for the property type, the lease and the fund's cash position varies more than the headline rate does.
Expect an LVR around 65%, with some lenders going to 70% on strong commercial security. Pricing runs above a standard commercial investor loan, usually by somewhere between 0.5% and 1.5% per annum, because of the extra structure and the limited-recourse security. Lenders also want the fund to keep a cash buffer after settlement rather than putting every dollar into the deposit, and personal guarantees from the members are standard. Clean deals settle on a commercial-property timeline, so weeks rather than days, with the valuation and the bare-trust paperwork usually setting the pace.
One thing isn't settled yet, and it's worth naming. It's unclear whether a fund can borrow to buy commercial property that isn't in business use yet on settlement day, such as a new or off-the-plan premises with no tenant. Until that's sorted, the clean version is a property already in business use. If you're looking at off-the-plan commercial, get the structure confirmed before you exchange.
Where it goes wrong
The common mistakes are all avoidable. Buying a mixed-use property where the residential half fails the business real property test. Running the lease-back on a handshake instead of a written market-rent lease. Trying to fold two titles into one LRBA, when the rule allows only one asset. And the new one since August: signing a residential contract inside the fund expecting to borrow, then finding no lender can write it. Each of these costs far less to catch before you exchange than after.
Where a broker fits
The SMSF loan is one piece of a structure that also involves the fund deed, the bare trust, the lease and the tax treatment. Your accountant or SMSF adviser owns that part. Our job is the finance: reading which lender on the panel will write your property, your fund and your lease at the sharpest terms, and getting the LRBA paperwork right so settlement doesn't stall. We're happy to work directly with your accountant on it.
If you're weighing up buying your business premises through super and want a broker's read on lender appetite, LVR and likely pricing, call 1300 094 529 or start with the application form. We arrange SMSF lending across a specialist panel, most often for professional and medical practices buying their own rooms. Most enquiries get a reply within four business hours.