On 23 June 2026, a significant change has been announced by the Federal Government to ban SMSFs from purchasing a residential property with a Limited Recourse Borrowing Arrangement (LRBA) as part of a legislative agreement with the Greens.
A summary of the changes that will take effect and other key information are detailed below:
- The ban on LRBAs are targeted towards Residential Properties.
- It is still allowable for an SMSF to purchase Business Real Properties through an LRBA
- Current SMSf residential properties under an LRBA will remain unaffected
- If contracts are exchanges before the commencement, the ban does not apply even if settlement occurs after
- It is still allowable to directly purchase a residential property
Currently, it is has not yet taken effect and it will be fully legislated once it has received Royal Assent.
After a Royal Assent, there is a window of 45 days before the commencement will take effect.
We have also prepared a video that explains more about the new LRBA ban:
For Funds that are currently seeking to finalise their contract of sale, further information on LRBAs can be found here.