Can my SMSF still buy residential property? Yes, but since 10 August 2026 it can no longer borrow to do it. For years, whether a fund could borrow to buy was one of the questions I heard most about super, and the answer was yes, within strict rules. For any new borrowing arrangement, it is now no.
What a self-managed super fund is
A self-managed super fund, or SMSF, is a private super fund whose members are also its trustees. It can have up to six members. The trustees make the investment decisions and keep the fund within superannuation law. You and your super fund are separate: each has its own borrowing capacity, its own tax and its own rules.
What changed on 10 August
An SMSF used to borrow to buy residential property through a limited recourse borrowing arrangement, where the lender’s claim is limited to the property being bought. From 10 August 2026, a new arrangement of this kind can only be used to buy business real property: land and buildings used wholly and exclusively in a business. A house or an apartment let to tenants does not qualify.
What did not change
- An arrangement entered into before 10 August 2026 keeps going. The property does not have to be sold, and the ATO has said refinancing one of these loans is not affected.
- If a binding contract was exchanged before 10 August 2026, the fund can complete it, even where settlement came later.
- A fund can still borrow to buy business real property, such as premises a business runs from.
- A fund can still hold residential property it buys without borrowing.
- Super funds sit outside the negative gearing changes that start in the 2027-28 income year.
The rules a fund still runs under
Whatever it holds, a fund is run for one purpose: paying for its members’ lives after work. A residential property in a fund cannot be lived in or rented by a member or anyone related to them, and it cannot be bought from a member. A fund also cannot draw equity out of a property to buy another, the way you can in your own name. Money from a sale stays in the fund until a member meets a condition of release, such as retiring after reaching their preservation age, which is now 60 for everyone.
Who this does not suit
Since August, an SMSF suits fewer of the people thinking about residential property. Without borrowing, a fund needs enough of its own money to buy a property outright and still keep cash for its costs, and a fund holding one large asset has little spread. If the members do not want to be involved in decisions, or the balance is modest, a large fund may serve them better.
For a fund that already holds property
The trustees I worry about are not the ones who missed the window. They are the ones holding a property under an old loan with no plan for the years ahead: when the loan ends, what the fund pays out once members retire, and what happens if the property needs selling to pay pensions. Super is one part of the picture, beside the property you hold in your own name, and seeing the two together is the conversation I have most often with people who have spent years building.
Whether your fund holds property, could still buy one, or faces a sale, the first conversation costs nothing.
Nicholas Lockhart
This article reflects the law as at 10 October 2026.
Source: ATO, Changes to LRBAs for property from 10 August (updated 29 July 2026); Treasury Laws Amendment (Tax Reform No. 1) Act 2026, Schedule 5.