SMSF Window Narrows

Australians considering buying residential property through a self-managed super fund may have a limited window to act before proposed borrowing restrictions are introduced.

Under the reforms agreed between Labor and the Greens, future limited recourse borrowing arrangements for residential property inside SMSFs would be banned. These arrangements are currently the main way SMSFs can borrow to purchase property.

Industry experts warn the change could reduce options for everyday Australians looking to build retirement wealth and diversify beyond shares and managed funds.

While SMSFs may still be able to invest in property through outright purchases, ungeared trusts or commercial property strategies, many funds may not have enough capital to buy residential property without borrowing.

The proposal has raised concerns that investors seeking SMSF property exposure may need to review their options before the rules are finalised.