After 10 August 2026, borrowing inside a self-managed super fund to buy property did not vanish, but it did narrow to a specific lane. New limited recourse borrowing arrangements can now only be used for real property used wholly and exclusively in carrying on a business. For trustees, the practical question is no longer whether they can borrow at all, but which purchases still qualify. Getting that judgment right matters, because relying on borrowing for a property that turns out not to qualify can leave a fund in a difficult position. This article maps which property purchases remain eligible.

The core test

The gateway is the Business real property test. Broadly, business real property is land and buildings used wholly and exclusively in one or more businesses. The word exclusively is doing a lot of work: the property must be used for business, not partly for private or residential purposes, subject to a narrow exception for primary production discussed below.

This is the same concept that has long allowed SMSFs to hold commercial premises, so it is well understood, but the borrowing change makes it the decisive question for any new geared purchase. If a property does not meet the business real property test, a fund can no longer borrow to buy it, whatever else its merits.

Whether a specific property qualifies is a question of fact, judged on actual use. Trustees should form that view carefully, with advice where there is any doubt, before committing to a purchase that depends on borrowing.

Commercial premises qualify

The clearest qualifying purchases are conventional commercial premises: offices, warehouses, factories, retail shops, and consulting or medical rooms. These are used wholly and exclusively in business, and they have always been the natural home of SMSF property borrowing. A business owner buying their own premises through the fund is the archetypal case.

Such properties can be leased to a related party, including the members' own business, provided the Lease is on genuine commercial terms at market rent. That related-party flexibility, unusual among SMSF investments, is a big part of why commercial property borrowing remains attractive and viable after the change.

Primary production land

Farmland and other primary production land can qualify as business real property where it is used in a primary production business. There is a specific and useful concession: the land can include a private residence, such as a farm homestead, without losing its business real property status, provided the area used for private residential purposes does not exceed two hectares and that is not the predominant use.

This makes it possible for farming families to hold productive land in their SMSF and borrow to acquire it, even though a dwelling sits on it. The concession is narrow and precise, so the two-hectare limit and the predominant-use requirement need to be respected rather than assumed.

What no longer qualifies

Standard residential Investment property is the clear casualty. A house or unit bought to rent out privately is not used in carrying on a business, so a new LRBA can no longer be used to acquire it. That is the central effect of the change, and it applies regardless of how attractive the individual property might be as an investment.

Mixed-use properties are the grey zone. A building that is part shop and part residence, or a property with a significant private component, may Fail the wholly and exclusively test. Trustees eyeing such properties for a geared purchase need to be especially careful, because a property that looks commercial can still fall outside the definition on its actual use.

Cash purchases are unaffected

It is worth restating that all of this concerns borrowing. A fund with sufficient cash can still buy residential property outright, because the change restricts new borrowing, not ownership. So a residential purchase that does not qualify for borrowing may still be perfectly possible if the fund can pay for it without a loan.

That distinction reframes the question for many trustees. Rather than asking whether a residential property qualifies for borrowing, which it now generally does not, the real question becomes whether the fund can and should buy it with available cash, weighing the concentration and Liquidity that a large unleveraged property brings.

Confirm before you commit

Because eligibility turns on the property's actual use, and because getting it wrong can undermine a geared purchase, the safe course is to confirm the business real property status in advance, in writing, with a specialist. Lenders will also apply their own criteria to commercial and rural property, which can be more conservative than for residential, so finance should be confirmed early too.

The change rewards trustees who do their homework on eligibility rather than assuming a property qualifies. This article is general information only and is not a recommendation to buy or borrow against any particular property; whether a specific purchase qualifies should be checked against the current rules and the property's real use.

A practical trap worth naming is the property that is intended to become business premises but is not yet used that way at the time of purchase. Eligibility for business real property turns on actual use, so a property bought vacant or with a residential tenant, on a plan to convert it to business use later, may not qualify as business real property at the point the fund needs it to. Trustees relying on a future intended use rather than current actual use should be especially cautious and take advice before assuming a borrowing arrangement is available.

Equally, trustees should not lose sight of the ordinary Superannuation rules that continue to apply to any qualifying purchase. The single acquirable asset rule, the restrictions on improving a property with borrowed funds, and the arm's length requirements for related-party loans all remain in force. A property can pass the business real property test and still create problems if the borrowing arrangement around it is poorly structured, so eligibility of the asset is necessary but not sufficient on its own.

Practical takeaway

After 10 August 2026, a fund can still borrow to buy property that passes the business real property test: conventional commercial premises such as offices, warehouses, shops and consulting rooms, and primary production land, which may include a homestead of up to two hectares. Standard residential investment property no longer qualifies for new borrowing, and mixed-use properties are a risk. Cash purchases remain possible. Confirm a property's business use and your finance in advance, with specialist advice, before committing.