If you've been following the recent headlines around SMSF property, you could easily be left thinking that borrowing to purchase property through an SMSF is no longer an option.
That's not quite the full story.
From 10 August 2026, the rules changed for new Limited Recourse Borrowing Arrangements (LRBAs) used by SMSFs to purchase residential property.
Under the new rules, an SMSF generally can't enter into a new LRBA to purchase an ordinary residential investment property.
But that doesn't mean SMSF property borrowing has disappeared altogether.
For business owners and self-employed Australians in particular, there is an important distinction to understand: eligible business real property can still be purchased using your SMSF.
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026, with the changes to SMSF borrowing commencing on 10 August 2026.
The change specifically affects new borrowing to acquire real property through an SMSF.
Under the amended rules, where an SMSF uses a new LRBA to purchase real property, that property must now meet the definition of business real property.
In practical terms, this means a new SMSF LRBA can generally no longer be used to purchase an ordinary residential investment property.
There are transitional provisions for arrangements entered into before the change, and existing residential LRBAs are not simply required to be unwound because the legislation has changed.
It's also worth making another distinction: the change relates to borrowing. It does not amount to a blanket ban on an SMSF owning residential property.
This is where the changes become particularly relevant for self-employed Australians and business owners.
The new rules continue to allow an SMSF to borrow through an LRBA to acquire property that meets the definition of business real property.
The Australian Taxation Office generally defines business real property as land and buildings used wholly and exclusively in one or more businesses.
Depending on the circumstances, that could include properties such as:
For a business owner who has been considering purchasing commercial premises, SMSF property may therefore still be part of the conversation.
This is an area many business owners don't realise may be possible.
Subject to the relevant SMSF rules, business real property can receive different treatment from residential property.
An SMSF may, in certain circumstances, acquire eligible business premises and lease those premises to a related business.
For example, a business owner may operate from a warehouse, office, factory or other commercial premises owned by their SMSF.
There are strict requirements around these arrangements.
The property must satisfy the business real property rules and transactions between an SMSF and related parties generally need to be conducted on genuine commercial, or arm's-length, terms. There are also broader SMSF investment, compliance and sole-purpose requirements to consider.
This is why SMSF property isn't simply a home loan conversation.
Your accountant, financial adviser and legal advisers should be involved in determining whether a particular strategy or structure is appropriate. A Home Loan Specialist can then help you understand the lending side and what finance options may be available.
The August changes don't mean every existing residential SMSF property arrangement suddenly stops.
The legislation includes transitional provisions for arrangements entered into before the new rules commenced.
Existing residential LRBAs may continue, and the legislation also preserves certain refinancing of borrowing under pre-commencement arrangements.
The exact circumstances matter, particularly for anyone who had a residential SMSF property transaction underway around the commencement date.
This is an area where getting professional advice about your specific SMSF structure is important.
For me, this is probably the most important part of the conversation.
We've spent a lot of time talking about SMSF residential property over the past few years. With the rules now changing, it's easy to assume that the opportunity has simply disappeared.
For some people, it has certainly narrowed.
But for business owners, the commercial property conversation is still very much there.
If you're a tradie thinking about purchasing a workshop, a business owner looking at your own premises, or a professional considering an office or commercial suite, understanding how SMSF commercial property lending works may be worthwhile.
It doesn't mean an SMSF purchase will be suitable for you.
It simply means the door hasn't necessarily closed. It's changed.
At Rate Money Marrickville, we specialise in helping self-employed Australians understand lending options that don't always fit neatly into the traditional box.
If you're hearing about the SMSF changes and wondering what they could mean for your commercial property plans, I'm happy to explain the lending side and work alongside your accountant, financial adviser and other professional advisers.