SMSF Property Borrowing: What the New LRBA Rules Mean for Trustees

Thinking about borrowing to invest in property through your SMSF? New rules affecting certain Limited Recourse Borrowing Arrangements (LRBAs) took effect from 10 August 2026, so now is a good time for trustees to review their arrangements.

A quick refresher: What is an LRBA?

An LRBA allows an SMSF to borrow to purchase an eligible asset, such as property. The asset is generally held in a separate trust, with the lender’s recourse limited to that asset.

While borrowing can help an SMSF invest in property without paying the full purchase price upfront, LRBAs come with strict compliance, investment and cash-flow requirements.

The new rules introduce additional restrictions for certain arrangements involving residential property. Existing arrangements may be treated differently from new borrowings, so the changes should not automatically be assumed to apply retrospectively.

What should trustees do?

• Review existing SMSF property loans and LRBA arrangements.
• Check proposed borrowing arrangements before signing any contracts.
• Ensure the SMSF’s investment strategy and documentation remain appropriate.
• Seek professional advice before entering into a new LRBA.

With SMSF property transactions often involving significant sums, getting the structure right from the beginning is essential.

Author

Anitta Rodrigues