July 8, 2026
Royal Assent was granted on 26 June 2026. The 45-day clock started that day. New limited recourse borrowing arrangements for residential property inside self-managed super funds will be prohibited from around 10 August 2026 onward, permanently. In this episode of the Positive Property Show, George Markoski walks through what the ban actually covers, what it does not, and why the practical deadline for anyone wanting to buy SMSF property in Australia is weeks earlier than the date on the legislation.
The bill passed both houses of Parliament on 25 June 2026 by 35 votes to 25. It was the price of the Greens’ support for Labor’s broader tax reform package covering negative gearing and capital gains tax. The specific mechanism removed is the limited recourse borrowing arrangement, known as an LRBA, used to purchase residential property inside an SMSF.
What remains fully intact: existing LRBAs are grandfathered and will not be unwound. Commercial property borrowing inside SMSFs is unaffected. Cash purchases of residential property inside an SMSF remain legal. Shares, ETFs, and managed funds inside super are unchanged.
What is gone: any new loan used to acquire residential property inside an SMSF, after the commencement date.
The legal date is around 10 August 2026. The practical deadline is considerably earlier, and George is direct about why.
In 2019, when the government floated a similar ban without legislating it, NAB, Westpac, and CBA all pulled their SMSF lending products before a single parliamentary vote was counted. The announcement alone killed the market. The same dynamic is already in motion. A small number of non-bank lenders are currently still offering SMSF residential loans. When they withdraw, which could happen any day, no replacement product becomes available overnight.
Setting up an SMSF takes time. Establishing the bare trust required for an LRBA takes time. Getting finance pre-approved takes time. Finding a suitable property and exchanging contracts takes time. The critical date is contract exchange, not settlement. A contract signed before commencement is fully grandfathered even if the property does not settle until 2027 or 2028. A contract signed one day after commencement is not.
Anyone starting the process this week has a narrow but viable path. Anyone waiting to see how things develop has likely already missed it.
The strategy being removed allowed an SMSF trustee to borrow against a single residential property held inside a bare trust, with the lender’s recourse limited to that asset alone. The rest of the fund remained protected. Rental income flowed into the super fund at the concessional 15% tax rate. On retirement, if the property was sold while the fund was in pension phase, the capital gain could be tax-free up to the transfer balance cap of $1.9 million per member.
George walks through two member results from investors who used this structure. Simon purchased a property in Northgate, Queensland for $429,000 inside his SMSF and a separate property in Caboolture for $550,000. Combined market value across both sits at approximately $1.365 million against a total purchase price of $979,000, a gain of roughly $385,000 across both properties in under 18 months, all accumulating inside a tax-concessional environment.
David Kachia, purchasing outside super in his personal name, bought the same Caboolture development for $550,000 and recorded $184,000 in growth in eight months.
George outlines the sequence clearly. First, get qualified advice from an SMSF accountant or licensed financial adviser to confirm whether the structure is appropriate for your situation and balance. This is not a decision to make without professional guidance. Second, if it is appropriate, begin the SMSF and bare trust establishment process immediately. Both take two to three weeks minimum. Third, get finance pre-approved and move to contract exchange before the lender pool narrows further.
The contract date is the line in the sand. Not the expression of interest, not the settlement date, not the deposit receipt. The executed contract between both parties, signed before commencement, is what locks an investor inside the window permanently.
For the complete Q&A, lender guidance, and the full breakdown of the grandfathering rules, listen to this episode of the Positive Property Show.
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