A superannuation technical team at a leading financial services organisation has clarified the timeline trustees must adhere to if they want to acquire an SMSF residential property using a limited recourse borrowing arrangement (LRBA) in light of the ban on gearing employed for this purpose.
“The government announced that the restriction would only apply to borrowing arrangements entered into starting 45 days after the bill received royal assent. But in addition, the [budget] amendment also confirmed that the restriction would not apply where the trustee entered into an arrangement to purchase the property within that period, even if the loan wasn’t in place by that time,” Colonial First State (CFS) senior technical manager Tim Sanderson told listeners of the latest FirstTech podcast.
“So that basically means that as long as all of your [associated] structures are established, such as the bare trust, and the fund trustees [or trustee] exchange contracts to purchase the residential property within that 45-day period, the fund should be covered by the transition [provisions].”
Sanderson confirmed Treasury Laws Amendment (Tax Reform No 1) Bill 2026 passing the budget measures into law received royal assent on 26 June, at the same time revealing how the 45-day grace period might be applied with regard to the 2026 calendar.
“The bill just talks about 45 days before the prohibition commences after royal assent, so that will include weekends and public holidays,” he indicated.
“So from our calculation, people wanting to buy a residential property via an LRBA will have until 9 August this year to sign the [relevant] contract and that’s a Friday.”
CFS head of technical services Craig Day emphasised how important it is to ensure all of the elements of the LRBA are put in place before this date.
“If the borrowing isn’t allowed, [the trustee or trustees] will probably have to sell the property, so make sure you get that right,” Day noted.
Darin Tyson-Chan
Editor
Darin is the founder and publisher of Benchmark Media, an independent publishing house whose mastheads include financialobserver, selfmanagedsuper and smstrusteenews. He has been covering the financial services space for over a decade and in this time he has worked for a variety of trade publications. Darin has also written for the Money section published in The Sydney Morning Herald and The Age.
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