Residential Property Borrowing Inside Super Is Ending

The government has announced a ban on new residential limited recourse borrowing arrangements (LRBAs) inside super. This affects SMSFs planning to borrow to buy residential property.

The ban will start 45 days after the law receives royal assent. The law is not yet final, so dates may still change.

✅ What’s Still Allowed

Existing residential LRBAs No change. You can keep your property, keep your loan, and keep the concessional tax treatment.

Refinancing an existing LRBA You can still refinance a residential LRBA that was in place before the ban.

Contracts signed before the ban If you sign a contract of sale before commencement, the purchase should still qualify — even if settlement happens later. The loan arrangement itself must also meet the rules, so documentation matters.

❌ What’s Ending

New residential LRBAs after commencement These will no longer be permitted. Only business real property (e.g., commercial premises) will remain eligible for LRBA borrowing.

🧭 What This Means for You

Already have a residential LRBA? You’re fully protected. Nothing changes.

Partway through setting one up? Move quickly. Your contract date is critical. Get legal advice to ensure your arrangement qualifies under the transition rules.

Planning to start one? This strategy is closing. You may need to consider an ungeared purchase, a different asset class, or buying property outside super.

🔍 Bigger Picture

This change sits alongside broader tax reforms — including the removal of the 50% CGT discount and tighter negative gearing rules — which together reshape the economics of property investment.

Harper Group Pty Ltd – Chartered Accountants Frankston - Ph 9770 1547

Disclaimer: All information provided in this article is of a general nature only and is not personal financial or investment advice. Also, changes in legislation may occur frequently. We recommend that our formal advice be obtained before acting on the basis of this information.

Please note we at Harper Group Pty Ltd are not licensed to provide financial product advice under the Corporations Act 2001 (Cth) and taxation is only one of the matters that must be considered when making a decision on a financial product, including on whether to make superannuation contributions. You should consider taking advice from the holder of an Australian financial services licence before making a decision on a financial product.