SMSF residential borrowing (LRBA) is now banned
TAKES EFFECT: 10 AUGUST 2026 — NOW LAW
From 10 August 2026, a new Limited Recourse Borrowing Arrangement (LRBA) involving real property must be for business real property. In practical terms, a new LRBA cannot be used to acquire ordinary residential investment property.
- Existing arrangements are grandfathered — if your fund already holds a residential LRBA, nothing changes.
- Cash purchases are unaffected — a fund with sufficient balance can still buy residential property outright, with no borrowing involved.
- Business real property remains available under an LRBA when the statutory definition and all other superannuation rules are satisfied.
- Qualifying refinancing is protected where it maintains a borrowing under an arrangement entered into before commencement.
Official source: Treasury Laws Amendment (Tax Reform No. 1) Act 2026, commencement table and Schedule 5.
Negative gearing limited to new builds
TAKES EFFECT: 1 JULY 2027 · APPLIES TO ESTABLISHED PROPERTY ACQUIRED AT OR AFTER 7:30pm AEST ON 12 MAY 2026
From 1 July 2027, investors who buy an established residential property at or after 7:30pm AEST on 12 May 2026 (Budget night) will no longer be able to offset rental losses against salary or other personal income. Losses can still be carried forward and offset against future rental income or capital gains from residential property.
- Properties bought before Budget night are grandfathered and keep current negative gearing rules for as long as they're held.
- New builds are exempt from the change entirely — full negative gearing remains available regardless of purchase date.
- New residential dwellings are exempt when they satisfy the requirements made under the legislation.
- Commercial property investment is outside this residential-property restriction.
The enacted rule compares deductible amounts and assessable income from residential dwellings across the income year. Net income from protected pre-announcement holdings and qualifying new dwellings can also reduce an excess under the legislation.
This can produce a different result for an investor with other positively geared residential holdings than for someone whose only residential holding makes a loss. The exact treatment depends on ownership, timing and income details, so obtain registered tax advice before relying on the calculation.
Official sources: Treasury Laws Amendment (Tax Reform No. 1) Act 2026, Schedule 2 and Treasury's 2026–27 tax summary.
The 50% CGT discount is being replaced
TAKES EFFECT: 1 JULY 2027 · APPLIES TO GAINS ACCRUING AFTER THIS DATE
From 1 July 2027, individuals, trusts and partnerships will no longer access the flat 50% capital gains tax discount on established residential property. It's being replaced with cost base indexation (adjusting your purchase price for inflation) plus a 30% minimum tax rate on the real (inflation-adjusted) gain.
- Gains that accrued before 1 July 2027 remain taxed under the old 50% discount rules.
- Qualifying new-build investors can choose between the existing 50% discount and the new inflation-based treatment.
Official sources: Treasury Laws Amendment (Tax Reform No. 1) Act 2026, Schedule 1 and Treasury's capital gains tax summary.
The 6-year main residence CGT exemption rule
STATUS: CONFIRMED UNCHANGED BY THE 2026 BUDGET
Your main residence is generally exempt from capital gains tax when the eligibility conditions are met. The "6-year rule" may extend that treatment after you move out: a former home used to produce income can continue to be treated as your main residence for up to 6 years.
- You must have genuinely lived in the property first — this isn't available for a property bought purely as an investment.
- You can't claim the exemption on two properties for the same period — only one main residence at a time.
- If you move back in before the six years is up, the clock resets, and the exemption can apply again in future.
- If one period of income-producing absence exceeds six years, a partial exemption may apply. The ATO's calculation can use market value when the home was first used to produce income, not its value at the six-year point.
Official source: Australian Taxation Office, Treating former home as main residence.
House and land packages keep the tax advantages
STATUS: QUALIFICATION MUST BE CONFIRMED
A house and land package may qualify as a new residential dwelling for the new tax rules. Qualification is not automatic: the dwelling and acquisition must satisfy the requirements made under the legislation.
- The legislation allows requirements to consider whether a dwelling was built on vacant land, substantially renovated, or built to replace a demolished dwelling.
- Construction and off-the-plan purchases also carry builder, valuation, timing and contract risks that need separate due diligence.
- A possible tax treatment should not replace assessment of location, price, build quality, finance and rental fundamentals.
Official source: Treasury Laws Amendment (Tax Reform No. 1) Act 2026, section 26-160.
SMSF property in 2026 — what still works
STATUS: NARROWED, NOT CLOSED
Putting the LRBA ban in context: SMSF property investment is still a legitimate strategy in 2026, just with fewer pathways than before.
- Cash purchases — residential or commercial property bought outright by a fund with sufficient balance is entirely unaffected.
- Business real property LRBAs remain possible when the statutory definition and all other superannuation rules are satisfied.
- Existing residential LRBAs are protected, and the transition provision also covers qualifying refinancing.
Not sure which SMSF pathway still fits your fund? We'll walk through it on a free call.
Book a free consultationOfficial source: Treasury Laws Amendment (Tax Reform No. 1) Act 2026, Schedule 5.
5% Deposit Scheme & Help to Buy
STATUS: SIGNIFICANTLY EXPANDED SINCE OCTOBER 2025
Two federal schemes now provide different forms of support. They have separate eligibility, property-price and lender requirements.
- Australian Government 5% Deposit Scheme: eligible first-home buyers can buy with a minimum 5% deposit and no Lenders Mortgage Insurance. The scheme has no income caps, waitlist or place limit, but property-price and other eligibility rules still apply.
- Help to Buy: a shared equity scheme offering a government contribution of up to 40% of the purchase price for a new home, or 30% for an established one, with a deposit as low as 2%. Income thresholds apply (from 1 July 2026: $103,000 for singles, $165,000 for joint applicants).
- Help to Buy is an equity share, not a grant. The Government shares proportionally in gains or losses and the participant has ongoing obligations.
Official sources: Australian Government 5% Deposit Scheme, Help to Buy and 2026–27 income thresholds.
Anti-money laundering (AML/CTF) checks are now mandatory
TOOK EFFECT: 1 JULY 2026 — NOW LAW
Under the "Tranche 2" reforms to the Anti-Money Laundering and Counter-Terrorism Financing Act, real estate agents and buyer's agents became regulated entities from 1 July 2026 — the same regime banks and financial institutions have operated under for years now extends to property transactions.
- Identity and beneficial ownership information may be required as part of customer due diligence.
- How the purchase is being funded is part of understanding the transaction. Detailed source-of-funds or source-of-wealth checks are applied where required by the service, risk assessment and AML/CTF program.
- Additional checks can apply to trusts, companies, SMSFs, politically exposed persons or higher-risk circumstances.
- Reporting entities must maintain an AML/CTF program, keep required records and report matters specified by law to AUSTRAC.
Official sources: AUSTRAC, obligations from 1 July 2026, information property buyers may need to provide and risk-based source-of-funds guidance.