What happened
Self-managed super funds are prohibited from entering new Limited Recourse Borrowing Arrangements to purchase residential property under rules effective 10 August. Existing arrangements established before this date are grandfathered and remain eligible for refinancing. SMSFs can still acquire residential property outright without debt, or utilise limited recourse borrowing to purchase commercial real estate assets.
Why it matters here
The regulatory change removes leverage as a strategy for residential property accumulation within SMSFs, shifting SMSF property allocations. Commercial real estate retains borrowing capability, making sectors like industrial warehouses and medical suites increasingly attractive for SMSF trustees seeking leveraged exposure, steady rental yield, and lower capital gains tax rates during accumulation and retirement phases.
What to watch
Portfolio reallocations toward commercial real estate assets and trustee compliance with grandfathered LRBA refinancing conditions.
Source
realestate.com.au