This is breaking news. On 23 June 2026, Prime Minister Anthony Albanese and Treasurer Jim Chalmers confirmed that the federal government has agreed to ban self-managed superannuation funds from using limited recourse borrowing arrangements to purchase residential property.
The change is the price the Greens extracted for Senate support of the government's broader tax reform legislation. It takes effect 45 days after the relevant bill receives royal assent. Transactions already in progress during that 45-day window are protected.
If you have been planning to buy residential property inside your SMSF using a borrowing arrangement, the window to act is now very narrow.
Until today, SMSFs could borrow money to purchase residential investment property through a structure called a limited recourse borrowing arrangement. Under an LRBA, the SMSF borrows from a lender, the property is held in a separate bare trust during the loan period, and the lender's recourse in the event of default is limited to the property itself -- protecting the rest of the fund's assets.
That structure is now banned for new residential property purchases.
What has not changed:
The Greens argued that SMSF borrowing for residential property contributes to housing affordability pressures by adding a tax-advantaged buyer to the market. Treasurer Chalmers sought to frame the scale of the change as modest, noting that SMSFs represent less than 1 per cent of total residential property borrowing and less than half a per cent of new residential borrowing each year.
The change has drawn criticism from across the property and financial planning industries. Property Investment Professionals of Australia chair Cate Bakos argued that SMSF investors are typically families with strong superannuation balances who turn to super property strategies when traditional borrowing becomes difficult -- not speculative investors inflating the market.
REBAA vice president Zoran Solano pointed out that housing affordability is fundamentally a supply problem and restricting a buyer group that represents less than 1 per cent of the market does little to address it.
If you were planning an SMSF residential property purchase using an LRBA:
The 45-day transition window from royal assent is the critical timeframe. Transactions that are sufficiently advanced -- contracts exchanged, finance in progress -- during that window are protected. If you have been considering this strategy, speak to your SMSF accountant and financial adviser immediately to understand whether your transaction can be progressed within the window.
If you already have an SMSF residential property loan:
Nothing changes for you. Your existing arrangement is fully grandfathered. You can continue to hold, manage, and eventually sell the property under the same rules that applied when you purchased it.
If you were considering an SMSF for commercial property:
The ban does not affect you. Commercial property LRBAs remain available. For business owners in particular, holding business premises inside an SMSF via an LRBA remains one of the most tax-effective strategies in Australia and is entirely unaffected by today's announcement.
If you were planning to invest in residential property outside of super:
The SMSF residential ban does not affect you directly. But the broader budget context is relevant. New purchases of established residential property in personal names after 12 May 2026 Budget night are subject to restricted negative gearing from 1 July 2027. New builds remain exempt. The off-the-plan and new construction market now has a structural tax advantage over established property for investors operating outside of super.
Today's SMSF announcement is the third significant policy change affecting residential property investors in 2026.
May 2026 Budget: Negative gearing restricted on established residential properties purchased after Budget night. New builds exempt.
May 2026 Budget: CGT discount restructured, with cost base indexation replacing the 50 per cent discount for new investors in established properties purchased after Budget night.
June 2026: SMSF borrowing for residential property banned for new arrangements.
Taken together, these three changes represent a fundamental restructuring of the Australian residential property investment landscape. The government is actively steering investment capital away from established residential property -- where it competes directly with owner-occupiers and first home buyers -- and toward new construction.
For investors, the implication is increasingly clear. New off-the-plan residential property is the pathway that retains the most complete set of tax advantages: full negative gearing, the new CGT treatment, depreciation benefits on new construction, and eligibility for SMSF purchase without the LRBA restriction on commercial property.
This is a fast-moving situation. The legislation is not yet final -- it still needs to pass the Senate and receive royal assent. But the government has the numbers to pass it and the announcement from the Prime Minister's office today confirms the direction.
The most important thing any investor or SMSF trustee can do today is speak to their accountant and financial adviser. The interaction between the budget changes and today's SMSF announcement is complex, and the right strategy depends heavily on individual circumstances.
For investors looking at new off-the-plan residential property -- which retains the strongest tax treatment under the current environment, browse current listings on the Coposit projects page. Properties can be secured with $10,000 upfront and the remaining deposit spread across weekly instalments during construction.
Download the Coposit app to explore what's available or contact the team to understand which projects suit your investment goals under the current policy environment.
This article covers breaking news announced on 23 June 2026. The legislation has not yet received royal assent. Details may change as the bill progresses through Parliament. This is general information only and does not constitute financial, legal, or tax advice. Speak to a licensed financial adviser and SMSF specialist before making any decisions.
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