What changed, and what did not
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received assent on 26 June 2026 and the ban on new residential limited recourse borrowing arrangements commenced 45 days later, on 10 August. From that date an SMSF cannot take a new loan to acquire a residential property, whether new or established. Arrangements entered before the date, and contracts already binding, continue as they were; nothing has to be refinanced or sold.
Borrowing for business real property, which is property used wholly and exclusively in a business, such as a warehouse, office, retail shop or medical suite, is unchanged. An SMSF can still buy residential property outright without borrowing. Whether any of this suits a particular fund is advice for your licensed adviser; the lending mechanics are below.
How an SMSF commercial loan is assessed
- Loan-to-value. Typically 60–70 per cent for commercial property inside super, lower than the same property outside it.
- Servicing. The rent from the property, plus the members' contributions at a level the lender accepts, against the interest at an assessed rate. Lenders want to see the fund's financials and the contribution history.
- Liquidity. Most lenders expect the fund to hold a cash buffer after settlement, often 10 per cent of the property value, so the fund can meet repayments and expenses through a vacancy.
- Rate and fees. SMSF commercial loans carry a higher rate than a standard commercial loan and higher establishment and legal costs, reflecting the structure.
The structure a lender requires
- The fund, with a trust deed that permits borrowing, and usually a corporate trustee.
- A bare trust (holding trust) with its own trustee, which holds the property on behalf of the fund until the loan is repaid.
- The limited recourse loan, where the lender's recourse on default is limited to the property itself. Lenders usually ask for personal guarantees from the members as well.
- The lease, at market rent, documented. Where the tenant is the members' own business, the lease must be on arm's-length terms and the rent paid in full and on time.
The documents are prepared by the fund's lawyer or accountant; a lender will not approve until the structure is in place and reviewed, so this sits before the contract, not after. The commercial property in your SMSF fact sheet sets out what has to exist, who sets it up, the steps in order and the rules, and downloads as a PDF to share with your accountant.
Buying your business premises through the fund
The most common SMSF commercial purchase: the fund buys the premises and leases them to the members' business. The business pays rent to its owners' super at a market rate, the fund holds the asset in a concessional tax environment, and the business has security of tenure. A lender assesses both the fund and the business, since the rent depends on the business continuing to pay it. The commercial property finance page covers the property side, and the business finance page the equipment and vehicles that usually come with a move.
Understanding that the residential door has closed but the commercial one has not, and what a lender needs to walk through it, is the useful starting point.