For Jay and Bernadine McCormack, buying property through super was not simply a retirement calculation. It became a financial buffer they did not know they would need. Their story illustrates why the now-in-effect SMSF borrowing ban holds significance beyond the usual debate about superannuation policy.
The couple established a self-managed super fund and purchased a three-bedroom home in Raceview, Queensland, for $452,700 in June 2023. According to figures shared on the Positive Property Show, its current market value is $710,000. A second property in Pinjarra, Western Australia, was purchased for $459,990 in May 2025 and is now valued at $730,000.
Together, the properties have produced a claimed $527,000 in equity growth. Then Jay suffered a stroke and was told he would not work again.
Their circumstances changed abruptly, but the assets were already in place.
What the ban actually changes
From 10 August 2026, an SMSF can no longer enter a new limited recourse borrowing arrangement to acquire residential property. The cutoff comes from the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, which commenced 45 days after receiving Royal Assent.
There is an important distinction. The legislation does not stop an SMSF from owning residential property. It restricts the use of new borrowed money to acquire it.
Existing borrowing arrangements remain protected. Refinancing may also remain available where it relates to a borrowing arrangement entered into before the commencement date. The law continues to permit limited recourse borrowing for business real property, subject to the broader superannuation rules.
That makes “ban” an accurate shorthand, but an incomplete explanation. The door has closed on one widely used pathway, not on every form of property ownership within super.
The federal government has argued the change reduces risk to retirement savings. It also says these arrangements represented less than 1 per cent of residential property borrowing and less than half a per cent of new residential borrowing each year. For the wider housing market, that may sound small. For an individual fund that relied on leverage, the effect can be decisive.
The strategy now starts with the structure
Before the cutoff, an SMSF with sufficient deposit funds could use an LRBA to purchase a residential investment property while limiting the lender’s recourse to that asset. Without that borrowing mechanism, trustees considering residential property will generally require substantially more capital inside the fund.
This changes the order of the decision. Investors should not begin by choosing a property and then search for a compliant way to fund it. They need to establish what their fund can legally acquire, whether it can do so without borrowing, and how the investment fits its documented strategy, liquidity needs and insurance position.
The episode’s discussion with superannuation specialist Jeff Bennett also makes clear that existing arrangements should not be treated casually. Refinancing, related-party dealings and alternative ownership structures can create legal, tax and compliance consequences. General information is not a substitute for advice based on the fund and its members.
Jay and Bernadine’s story illustrates why these decisions matter. Their two properties did more than rise in value. They gave the family options after life changed without warning.
The SMSF borrowing ban has narrowed the route into residential property. It has not removed the need to understand the routes that remain.
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