The Australian Government’s ban on new SMSF residential property borrowing has left many trustees asking: what do I do now? Here is a clear, practical action plan for every SMSF scenario.

Step 1: Assess Your Current Position

First, clarify what you have: (a) an existing residential LRBA — your loan continues unchanged, no action required; (b) a residential purchase under negotiation — seek urgent legal and financial advice, as the effective date matters; (c) a future residential LRBA you had planned — this needs to be redirected to an alternative strategy; or (d) an SMSF with cash ready to deploy — you have options, outlined below.

Step 2: Consider the Commercial Property Pivot

If you want to stay in property with leverage, commercial is the clear alternative. SMSF commercial LRBAs remain fully available. The process is the same as a residential LRBA — bare trust, limited recourse loan, SMSF as beneficial owner — but applied to a commercial asset. Warehouses, medical centres and childcare facilities are producing strong yields and are in high SMSF demand in 2026.

Step 3: If You Cannot Borrow, Consider Residential Without Leverage

If your fund has the cash and you prefer residential property, you can still buy — you just cannot borrow to do it. For funds with $600,000 or more in available capital, an unleveraged residential acquisition in a high-demand inner suburb remains a compelling long-term hold inside super.

Step 4: Diversify Into Liquid Property Assets

A-REITs and property ETFs provide property exposure with no management burden, no concentration risk and same-day liquidity. For funds that need to maintain flexibility — approaching pension phase, multiple members with different retirement timelines — this is often the most practical solution.

Step 5: Maximise Contribution Strategies

While you reconfigure your investment strategy, maximise concessional contributions ($30,000 per member per year) and consider non-concessional top-ups. This builds the capital base that gives you more options — including a commercial LRBA — as the fund grows.

Step 6: Get Professional SMSF Advice

The ban has created genuine complexity around transition strategies, existing loan grandfathering, and timing of contracts. An SMSF specialist accountant or financial adviser can ensure you navigate the rules correctly and structure the optimal post-ban strategy for your fund’s specific situation.

GeeVee Verdict

For most property-focused SMSF trustees, the post-ban action plan is: redirect planned residential LRBA capital to a commercial property acquisition, maximise concessional contributions, and use A-REITs to maintain property exposure in the interim. The opportunity has not disappeared — it has shifted asset class.

Frequently Asked Questions

Can I still complete a residential property purchase I have already started?

This depends on the effective date of the legislation and the stage of your contract. Seek urgent legal advice if you have a residential contract of sale signed but not yet settled.

Can I use my SMSF cash to buy residential property without a loan?

Yes. The ban applies to new borrowing arrangements — not to outright cash purchases of residential property.

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