Buying residential property in your SMSF without borrowing (2026 onwards)

Since 10 August 2026, SMSFs cannot enter new LRBAs to buy residential property. Outright purchases are still permitted, so the question for most trustees is no longer whether they can hold residential property, but how to get enough cash into the fund to buy it.

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01Step 1: work out the true purchase cost

Budget the purchase price plus stamp duty, legal fees, building and pest inspections, and a working-capital buffer. Without a loan there is no lender requiring a buffer, so trustees have to impose one themselves — vacancy, repairs and insurance still have to be paid from fund cash.

02Step 2: consolidate the fund's capital

• Roll over balances from APRA funds for all members who want to participate.
• Plan concessional and non-concessional contributions across financial years, using bring-forward rules where eligible.
• Consider whether adding a member (for example a spouse or adult child) is appropriate — more members means more capital but also shared control.
• Factor in any downsizer contribution eligibility if members are 55 or older.

03Step 3: keep the fund liquid

A single large property can dominate an SMSF's balance sheet. Trustees should model pension payments, tax, insurance premiums and the annual audit and administration cost against expected rent. Illiquidity is the most common criticism auditors raise on property-heavy funds.

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04Step 4: document the investment strategy

Your investment strategy must address diversification, liquidity, risk and insurance for members. Where a single property is a large share of the fund, the strategy should explicitly explain why the trustees consider that appropriate.

05The rules that have not changed

• Residential property cannot be acquired from a related party.
• It cannot be lived in or rented by a member or relative, even at market rent.
• All dealings must be on arm's-length terms and rent must be at market rates.
• The property must be valued at market value each year for the fund's accounts.

06Is commercial property a better fit?

Because LRBAs remain available for business real property, trustees who want leverage often reconsider commercial. Business real property can also be acquired from a related party and leased to a member's business at market rent — two things residential can never do.