SMSF Property Borrowing Has Changed
Aug 19, 2026
What does it mean for commercial property following the SMSF property borrowing changes from 10 August 2026?
Published: 11 August 2026
From 10 August 2026, new rules apply to SMSF borrowing for residential property but commercial property may still be an option.
That does not mean residential property is banned from SMSFs altogether. An SMSF may still acquire residential property using its available funds, subject to the applicable SMSF rules.
For business owners, the more relevant question is:
Can an SMSF still borrow to buy commercial property?
Potentially, yes.
Eligible business real property can still potentially be acquired using an LRBA, provided the relevant requirements are satisfied.
What counts as business real property?
A property being described as “commercial” does not, by itself, automatically make it qualify as business real property for SMSF purposes.
The property's characteristics and how it is used need to be considered.
This can become particularly important where the property is:
mixed-use;
partly residential;
vacant;
being acquired from a related party; or
intended to be leased to a related business.
As a rule of thumb, don't rely on the property's description alone.
Areas to watch
If you're considering purchasing commercial property through an SMSF, pay particular attention to:
Mixed-use property — where the property has both commercial and residential components.
Vacant land — the intended use and relevant requirements need to be considered.
Related-party arrangements — particularly where the property will be acquired from or leased to a related entity.
The acquisition structure — including the SMSF trustee, custodian or bare trust and lender requirements.
The contract — the purchaser and contractual arrangements should align with the proposed structure.
What should you check before buying?
Before signing the contract, consider:
Is the property actually eligible business real property?
How will it be used?
Is there any residential or mixed-use component?
Who will actually acquire the property?
Does the contract work with the proposed SMSF and custodian structure?
These questions can be particularly important where the property is being acquired for use by a related business.
Get the structure right early
An SMSF property purchase isn't just about finding the property and getting the loan.
The SMSF trustee, custodian or bare trust, lender, property and contract all need to fit together.
It is much easier to work through this before the contract is signed than to try to change the structure afterwards.
These questions can be particularly important where the property is being acquired for use by a related business. There may also be other issues to consider, including stamp duty, registration, finance and the terms of any lease to a related business.
At Alteris Legal, we focus on the property side of the transaction. We don't advise on whether an SMSF is the right investment or financial structure, but we can identify property and contract issues that should be considered alongside your financial and taxation advice.
The takeaway
The new rules do not mean SMSF property borrowing is over.
For business owners considering purchasing their commercial premises through an SMSF, an LRBA may still be available where the property qualifies as business real property and the relevant requirements are met.
The important distinction is not simply residential vs commercial. It is whether the property qualifies as business real property and whether the proposed acquisition structure works.
Before signing, make sure you understand the property, its proposed use and the acquisition structure.
Getting those details right at the beginning is usually much easier than trying to fix them later.
This article provides general information only and is not legal, financial, taxation or superannuation advice. Specific advice should be obtained for your circumstances.
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