SMSFs planning to buy a residential property via a limited recourse borrowing arrangement (LRBA) before the August cut-off date should ensure their contracts of sale are correct for the transaction to complete after that deadline, a non-bank lender has noted.
Bluestone head of specialised distribution Richard Chesworth said residential property LRBAs were still available for use by an SMSF until 9 August, after which they cannot use them as a result of changes made in federal parliament to pass the budget.
Chesworth added, however, the fund would need to have a legally acceptable contract in place and signed on or before that date to proceed further.
“From 10 August 2026, it won’t be possible to rescind or revise a contract of sale, so it’s worth getting the contract details right the first time,” he said.
“The most common errors that occur with SMSF property purchases usually relate to the contract of sale. Whether they’ve already executed a contract of sale or are in the process of executing one, it’s important to have the right support to make sure everything is in order.”
He pointed out the errors that usually occur related to the purchaser’s name on the contract, the asset involved and the bare trust required when using an LRBA.
“Check the contract of sale name is the correct legal purchasing entity. If purchasing in Victoria or South Australia, and the purchase contract has been executed with an ‘and/or nominee’ clause, seek advice on what steps are required before 10 August 2026,” he said.
“The contract also needs to reflect one single acquirable asset, not multiple asset descriptions bundled together.
“If purchasing in Victoria and the property includes a restriction or accessory lot, like a second title for a garage or storage space, check with a solicitor that the right restrictions are documented and the assets are legally tied to be sold together.
“Address the bare trust needs now. A bare trust is set up under state-based trust law, so timing can vary depending on where the transaction takes place. Have a conversation with a solicitor or conveyancer early on about when to establish and execute the bare trust deed.”
He reminded SMSF trustees and members the restrictions on residential property LRBAs were limited in their scope and do not extend to existing arrangements or commercial property.
“[Existing SMSF loans] are in the clear. This change doesn’t affect existing arrangements as LRBAs for existing residential properties can still be refinanced to another lender,” he said.
“Commercial property purchases through SMSFs aren’t affected by this change either; it’s specifically about borrowing towards new residential property purchases.”
Jason Spits
SENIOR JOURNALIST
Jason is a senior journalist with Benchmark Media and writes for the selfmanagedsuper website and magazine and smstrusteenews website. He has covered financial services since 1999 and has written about life insurance, superannuation, investment management and financial advice, in both a freelance and in-house capacity, and also did a brief stint as a media manager for an industry association. He has been the editor of trade titles Money Management and Financial Standard, and was most recently senior journalist with life insurance title Riskinfo.
Articles by Jason