Buying property through your SMSF after the LRBA changes

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Monday, 10 Aug 2026

Introduction

For many medical practitioners, purchasing property through a self-managed superannuation fund (SMSF) forms part of a long-term strategy to build wealth or acquire consulting rooms for their practice.

Recent changes to the Limited Recourse Borrowing Arrangement (LRBA) rules have changed how SMSFs can borrow to buy property. From 10 August 2026, SMSFs can no longer use a new LRBA to acquire residential property. However, they can still use an LRBA to acquire eligible business real property.

Much of the discussion has focused on the tax and financial impact of these changes. The Australian Financial Review has also reported increased demand from SMSF purchasers seeking to complete transactions before the new rules took effect, together with growing interest in alternative ownership structures.

Whether you are purchasing consulting rooms for your practice or investing in property through your SMSF, there are also important legal issues to consider. Obtaining legal advice before signing a contract can help ensure the purchase is structured correctly and avoid costly mistakes.

1. Not every commercial property is "business real property"

Many medical practitioners assume that every commercial property can be purchased through an SMSF using an LRBA. This is a common misconception.

The legislation uses the defined term "business real property", which has a specific legal meaning. Whether a property qualifies depends on how it is used, not simply whether it is zoned for commercial use.

Consulting rooms used wholly and exclusively in a medical practice may qualify as business real property. However, appropriate due diligence and legal advice should be obtained before signing the contract to confirm that the property satisfies the legislative requirements.

2. Don't assume residential property is no longer possible

The LRBA changes do not prevent SMSFs from purchasing residential property altogether.

Residential property may still be acquired by an SMSF without borrowing, or through another legally permissible ownership structure, depending on your circumstances and the applicable superannuation rules.

If your long-term investment strategy includes residential property, it is now more important than ever to consider the most appropriate ownership structure before signing a contract. Obtaining legal, accounting and finance advice early can help ensure the purchase is structured correctly and avoid costly mistakes.

3. Get the purchasing entity right before signing

One of the most common and costly mistakes is signing a contract in the wrong name. This often occurs where a medical practitioner signs a contract personally before deciding to purchase through an SMSF or bare trust.

Once a contract has been signed or exchanged, changing the purchaser may not be possible without the seller's consent and could have stamp duty, tax and finance implications.

If you are purchasing through an SMSF using a bare trust, the bare trustee (custodian) structure should be established at the appropriate time under the relevant state's requirements. Trying to correct the structure after signing the contract can cause settlement delays and unnecessary costs.

It is also important to understand that the timing for establishing the bare trust differs between states. In some states, the bare trust must be established before or on the contract date (for example, Queensland), while in others it can generally be established after the contract date (such as New South Wales and Victoria).

Obtaining legal and SMSF advice before signing the contract can help ensure the correct purchasing structure is in place from the outset.

4. Arrange your finance early

SMSF lending is generally offered by a smaller number of lenders than standard residential lending, making it important to arrange your finance as early as possible.

Before signing a contract, you should speak with your lender or mortgage broker to understand your borrowing capacity and obtain pre-approval where available. Formal loan approval will often require a signed contract and valuation of the property.

Where possible, you should negotiate a finance condition to allow sufficient time for your lender to complete its assessment. While finance conditions are common in many Australian jurisdictions, they are less commonly accepted in New South Wales, particularly for auction and competitive private treaty sales.

Early planning with a lender or broker experienced in SMSF lending can help reduce the risk of finance delays affecting settlement.

5. Review the contract carefully

Before signing a contract, SMSF purchasers should ensure the contract is reviewed by their lawyer. Particular attention should be given to:

• finance conditions;
• due diligence periods;
• settlement dates;
• GST provisions (particularly for commercial property);
• existing leases and tenancy arrangements;
• whether the property's permitted use aligns with your intended medical practice;
• outgoings and settlement adjustments; and
• any special conditions that may affect the purchase.

For medical practitioners purchasing consulting rooms, these issues can significantly affect both the operation of the practice and the long-term investment. Having the contract reviewed before signing can help identify potential risks, ensure the terms align with your SMSF structure and avoid costly issues later in the transaction.

6. Coordinate your professional advisers

An SMSF property purchase often involves a number of professionals, including your accountant, financial adviser, lender or mortgage broker, and lawyer.

Medical practitioners frequently have an established team of advisers. While each adviser plays an important role, they may not always be familiar with the legal requirements of property transactions in every Australian jurisdiction.

This is particularly important if you are buying interstate. Your accountant, financial adviser or trust provider may not be familiar with the property and stamp duty requirements in another state. For example, the timing for establishing a bare trust differs between jurisdictions, and getting it wrong can result in unnecessary delays, additional costs or duty implications.

Working with advisers who understand the requirements of the relevant state, and ensuring they communicate with each other early in the transaction, can help avoid these issues and keep your purchase on track.

Conclusion

Purchasing property through an SMSF requires careful planning before a contract is signed.

Whether you are purchasing your first consulting rooms, expanding your medical practice or investing for retirement through your SMSF, obtaining legal advice early can help ensure the transaction is structured correctly, minimise delays and avoid costly mistakes.

We can help you

If you have any questions, or would like more information about how we can assist you or your practice, please call 1800 867 113, or to organise a confidential discussion at a time that suits you, please click here