Last week saw the end to an important way that some Australians to save for their retirement. From 10 August 2026, Self Managed Super Funds (SMSFs) are no longer able to enter into a new Limited Recourse Borrowing Arrangement (LRBA) to purchase residential investment property. An LRBA is a fancy acronym for a loan taken out by an SMSF to buy an asset, which is typically property or shares.
As a quick recap, an SMSF gives members direct control over how their retirement savings are invested, rather than leaving those decisions to an unknown third party. That investment control is one of the main reasons why people set one up, including the ability to invest directly in property.
For many SMSF trustees, especially those under 50 who don’t yet have substantial superannuation balances, borrowing to invest has been a key part of their plans to save for their retirement. It allowed SMSFs to purchase property using part loan and part member balances. This is no longer allowed for the purchase of residential property.
Borrowing is still available for Business Real Property (commercial, industrial, and similar assets used wholly and exclusively in a business) and shares.
While this is a blow to those planning to invest this way, the good news is that existing residential LRBAs are unaffected. If a fund already has a loan in place, it continues as-is. It’s also important to note that an SMSF can still invest in residential property, it just can’t borrow to fund the purchase.
Despite these changes, SMSFs remain an effective way to save for your retirement. Benefits like greater control over investment decisions, control of your cashflow, flexibility across asset types, and the ability to invest in real property are unaffected by this change.
If you’d like talk about whether an SMSF is a good fit for you, call me on (02) 9913 9995.
