Key Highlights

• Yes. The fund may buy property outright using its own money, provided all existing SMSF rules are satisfied.

• New LRBAs can acquire real property only when it meets the Business real property definition.

• Generally no. Related-party Acquisition restrictions ordinarily prevent an SMSF from buying residential property from a member.

• The Investment strategy, sole-purpose test, liquidity, valuation, related-party rules and arm’s-length requirements remain important.

Headlines about the 2026 Superannuation reforms have left many trustees with a simple, anxious question: can my SMSF still buy property? The short answer is yes. The longer answer requires drawing a line that the new law makes decisive — the line between acquiring property with the fund's own money and acquiring it through borrowing. An SMSF can still purchase property outright, using cash and existing assets, subject to the long-standing rules that have always governed super fund investment. What has narrowed is geared acquisition of residential property through a new limited recourse borrowing arrangement (LRBA). This article explains the distinction and what remains open to trustees.

The change in one sentence

The Treasury Laws Amendment (Tax Reform No. 1) Act 2026, Schedule 5, which took effect on 10 August 2026, provides that a new LRBA can be used to acquire real property only where the property is business real property under the SIS Act 1993. In effect, residential property can no longer be bought through a new LRBA. That is the entirety of the property change. It does not touch cash purchases, and it does not ban SMSFs from owning residential property.

Buying with existing SMSF cash: still allowed

If an SMSF has the funds — from contributions, rollovers, accumulated Earnings or the sale of other Assets — it can still buy property outright, without borrowing. This pathway is unchanged by the 2026 reform. It has, however, always been subject to a framework of rules that trustees must satisfy regardless of the property type.

The sole purpose test requires that the fund is maintained for the purpose of providing retirement benefits, so the property must be an investment for members' retirement, not for their present-day use or enjoyment. The related-party acquisition rules generally prohibit an SMSF from acquiring residential property from a member or other related party, even at Market Value — a critical constraint that catches trustees who hope to sell their own home or investment unit into their fund. Transactions must be conducted on an arm's-length basis, and the in-house asset rules limit certain dealings with related parties. None of these rules changed on 10 August; they simply remain the framework within which a cash purchase must sit.

Buying with borrowing: now narrower

Where an SMSF wants to use debt, the LRBA is the mechanism that permits it. From 10 August 2026, a new LRBA can fund only business real property. A commercial premises used wholly and exclusively in a business can still be acquired with a new LRBA; a residential rental cannot. Trustees who had assumed that gearing into residential housing through their fund remained available will need to rethink, because that specific combination — new borrowing plus residential asset — is what the reform removes.

What an SMSF may still purchase

Putting the pieces together, several pathways remain open. An SMSF may buy residential property outright with its own cash, provided it is not acquired from a related party and the other rules are met. It may buy business real property either outright or through a new LRBA, and business real property can generally be acquired from a related party at market value — a long-standing exception discussed below. It may continue an existing residential LRBA entered into before 10 August 2026, and it may refinance such an arrangement. And where a binding contract to acquire property was exchanged before 10 August 2026, an associated LRBA can still proceed even if settlement is later.

Hypothetical example

Consider the Rossi Super Fund, holding $900,000 in cash and shares. The trustees would like exposure to property. Buying a $700,000 residential unit outright with fund cash remains possible, provided the seller is unrelated and the purchase satisfies the sole purpose test and arm's-length requirements. Alternatively, the trustees could acquire a small commercial premises — say a suburban office — either outright or, if they wished to gear, through a new LRBA, because commercial premises used in a business can qualify as business real property. What they can no longer do is take out a new Loan to buy that residential unit. This example is illustrative only and not advice.

Risks and mistakes to avoid

The classic trap is the related-party residential purchase. Trustees sometimes assume that if they pay market value, they can move a personally owned residential property into their SMSF. The related-party acquisition rules generally prohibit this for residential property, and paying market value does not cure it. A second trap is liquidity: buying property outright can concentrate a fund's assets and strain its ability to pay pensions or meet expenses. A third is assuming a commercial-looking asset automatically qualifies as business real property when the wholly-and-exclusively test is not met. Each of these risks predates the 2026 reform but remains live.

What trustees should watch next

Trustees weighing a cash purchase should confirm the seller is not a related party and that the fund retains enough Liquidity for its obligations. Those considering business real property, with or without borrowing, should verify the property genuinely meets the SIS Act test. And all trustees should keep an eye on ATO guidance clarifying how the new LRBA restriction applies in borderline cases.

Conclusion

An SMSF can still buy property in 2026 — the question is how. Cash purchases of residential or commercial property remain available within the established rules, business real property can still be geared through a new LRBA, and existing residential borrowings are grandfathered. Only new residential gearing has been removed. Because the rules interact in complex ways, trustees may wish to obtain appropriately qualified professional advice before committing.