This is the most urgent question being asked by the hundreds of thousands of Australians who currently hold residential property inside their SMSF through a Limited Recourse Borrowing Arrangement. The short answer: existing LRBAs are protected. The ban applies to new borrowing arrangements only. But there are important nuances every existing SMSF borrower needs to understand.

Are Existing SMSF Property Loans Safe?

Yes. The residential borrowing ban applies to new LRBAs entered into after the legislation takes effect. Existing LRBAs — residential or commercial — are not required to be unwound. Your existing SMSF property loan continues under its current terms.

What Can Existing SMSF Borrowers Still Do?

• Continue repaying the loan: All existing LRBAs continue as normal. You make repayments, claim interest deductions inside the fund, and hold the property under the existing bare trust structure.
• Refinance the loan: Refinancing an existing SMSF LRBA to a better interest rate or different lender is generally considered permitted under the ban, as it does not constitute a new borrowing arrangement. You should confirm this with your SMSF adviser and the ATO as legislation is finalised.
• Sell the property: You can sell the property at any time. The proceeds return to the fund as cash and can be reinvested in any compliant SMSF asset.
• Hold and let it pay down: The simplest strategy for many existing borrowers — continue holding the property, let the loan pay down, and transition to a fully owned asset inside the fund.

What Existing SMSF Borrowers Cannot Do

• Take out a new residential LRBA to buy a second residential property
• Use equity in the existing SMSF property to borrow against (cross-collateralisation is not permitted inside SMSFs regardless of the ban)
• Transfer the property out of the bare trust structure into direct SMSF ownership before the loan is repaid (this would be a breach of LRBA rules)

Key Questions to Ask Your SMSF Adviser Right Now

1. Is my existing LRBA fully protected under the ban legislation as currently drafted?
2. Can I refinance my existing residential LRBA to a lower rate?
3. Should I consider selling my existing residential property and pivoting to commercial?
4. What is the most tax-effective exit strategy for my existing residential SMSF property?

GeeVee Verdict

Existing SMSF borrowers do not need to panic. Your loan is protected. What you need to do now is review your overall SMSF strategy — specifically, whether your next property acquisition will be commercial (where borrowing remains available) or residential (where it is not). Use this moment as a trigger to review your fund’s investment strategy statement and ensure it reflects the new landscape.

Whether you are reviewing an existing SMSF property loan or planning your next acquisition after the borrowing ban, the Collings Property Platform gives you access to off-market commercial and residential 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

Will the government force me to sell my existing SMSF property?

No. The ban applies to new LRBAs only. Existing arrangements are not required to be unwound.

Can I still refinance my existing SMSF loan?

Refinancing is generally considered permitted as it does not constitute a new borrowing arrangement. Confirm with your SMSF adviser as the final legislation is published.

What if I want to buy another residential property in my SMSF?

You can still buy residential property outright (without borrowing) inside your SMSF. You cannot use a new LRBA for residential property after the ban takes effect.

Does the ban affect commercial property loans inside my SMSF?

No. Commercial property LRBAs remain fully available for new acquisitions.