Yes. SMSFs can still borrow to buy commercial property in 2026. The Australian Government’s proposed ban on new SMSF borrowing arrangements applies only to residential property acquisitions. Commercial property — including warehouses, offices, retail premises, medical centres, and industrial assets — remains fully available for SMSF borrowing under a Limited Recourse Borrowing Arrangement (LRBA).
This is the single most important distinction for SMSF investors to understand right now.
What Is a Limited Recourse Borrowing Arrangement (LRBA)?
An LRBA is the legal structure that allows an SMSF to borrow money to purchase a single acquirable asset — in this case, a commercial property. Key features:
- The property is held in a bare trust (separate from the SMSF) until the loan is fully repaid
- The lender’s recourse is limited to the asset in the bare trust — the rest of the SMSF is protected
- Once the loan is repaid, the property is transferred into the SMSF’s name
- All rental income and capital growth flows to the SMSF
SMSF Commercial Property LRBA — Key Rules
| Rule | Detail |
|---|---|
| Asset types allowed | Commercial property (office, retail, industrial, medical) |
| Residential property | Banned for new LRBAs from 2026 (proposed) |
| Typical LVR | 60–70% of commercial property value |
| Bare trust required | Yes — property held separately until loan repaid |
| Related party lease | Permitted under business real property exemption |
| Minimum fund balance | Typically $200,000–$300,000 |
What Types of Commercial Property Can an SMSF Borrow to Buy?
- Industrial warehouses and logistics facilities
- Commercial offices (strata or standalone)
- Retail shops and showrooms
- Medical and dental centres
- Childcare facilities
- Service stations
- Mixed-use commercial properties
The Commercial Property Pivot Opportunity in 2026
With residential LRBA borrowing banned for new acquisitions, SMSF investors who previously targeted residential property are now pivoting to commercial assets. This is creating strong demand for quality commercial property — particularly in the under-$2 million range that most SMSFs can comfortably access.
Industrial warehouses in Melbourne’s inner-north and west, strata offices, and medical centre investments are seeing the strongest SMSF-driven demand in 2026.
Whether you’re buying your first investment property, building a portfolio, or exploring SMSF property investment, the Collings Property Platform gives you access to off-market opportunities, portfolio tracking, investment tools, and property insights powered by GeeVee AI. Join free today and start building your property future. collings.com.au/portal
Frequently Asked Questions
Does the 2026 SMSF borrowing ban apply to commercial property?
No. The proposed ban applies only to new LRBA arrangements for residential property. Commercial property borrowing via LRBA remains fully available.
Can an SMSF use an LRBA to buy a warehouse?
Yes. Warehouses and industrial properties are among the most popular SMSF commercial acquisitions in 2026 due to their strong yields and long lease terms.
Can an SMSF borrow to buy business premises?
Yes, and this is one of the most powerful SMSF strategies available. The business real property exemption allows an SMSF to purchase premises leased to a related business at market rent.
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