On 10 August 2026 the rules for borrowing inside a self-managed super fund changed. A fund can no longer enter a new limited recourse borrowing arrangement to acquire residential property. A new arrangement entered from that date must be for business real property.

Existing residential arrangements are untouched. They continue on their terms, and they can still be refinanced. A fund can also still buy residential property outright, with its own cash, because that is not borrowing.

What closed was one path. Not the strategy.

What business real property means here

Business real property is land and buildings used wholly and exclusively in one or more businesses. The common case is the premises your own business trades from — the warehouse, the workshop, the clinic, the yard — acquired by your fund and leased back to the operating entity on arm's-length terms.

It is not a loophole and it was not created by the change. It is the arrangement that survived it, and for a business owner who was already paying rent to a landlord, it was frequently the better structure anyway.

The word doing the work is exclusively. Mixed-use premises, a residence above the shop, a portion let to an unrelated tenant — each of those changes the answer, and each is decided on the facts before anything is lodged, not after.

The test does not stop at settlement

This is the part most coverage misses, and it is the one that matters most over a twenty-year loan.

The ATO's guidance is that the asset must continue to be business real property for the entire life of the arrangement — wholly and exclusively used in one or more businesses for the whole duration, not merely at the moment the fund borrows. If it stops meeting that test part-way through, the fund has not maintained the arrangement in accordance with the rules, and compliance action may follow.

A vacancy alone does not break it. The guidance is explicit that a property does not stop being business real property simply because the owner is looking for a new tenant. What breaks it is abandoning the intention to lease it as business premises at all — which is why documenting a genuine, continuing leasing effort during any vacancy is not administrative tidiness. It is evidence.

So a borrowing arrangement of this kind is not set-and-forget. It is a position that has to be monitored and evidenced for as long as it runs.

What we structure

The fund, the operating entity, the lease and the lending are four moving parts that have to fit together and stay fitted. Most of the risk sits in the joins, not in any single piece.

Where the documents contradict each other, the problem is discovered at audit, and by then it cannot be unwound. That is the work: making sure they never contradict each other in the first place.

If you were mid-plan when the rules changed

Some funds were partway through a residential arrangement when the transition closed. Some had a contract and no settlement. Some have an existing loan and are now asking whether to refinance it or leave it alone.

Those are three different questions with three different answers, and none of them are answered by a general page. Bring the documents and we will work through where the file actually sits.

Where our work stops

AeFin structures the lending. Whether an SMSF should hold your business premises at all, whether the arrangement suits your circumstances, and what it does to your fund's tax and retirement position, are decisions for your licensed financial adviser and accountant. We work alongside them, not over them, and we do not recommend properties.

Related

General information only — not personal financial product or credit advice, and not tax or superannuation advice. Rules described here are current as at August 2026 and your own circumstances decide how they apply. AeFin is an Australian Credit Representative (CR 464548) of Finsure (ACL 384704).