The SMSF Headline — What Actually Changed, and What Didn't

You've probably seen the headlines: the federal government has agreed to ban self-managed super funds from borrowing to buy residential property. It's been framed as the end of property in super. It isn't. Here's what actually changed — and the part the headlines are skipping.

What's actually on the table

The change targets new borrowing — limited recourse borrowing arrangements (LRBAs) — used by SMSFs to buy residential property. Three things matter:

• Existing arrangements are grandfathered. If your SMSF already holds residential property under a loan, nothing forces you to unwind it.

• There's a 45-day transition for purchases already in progress when the legislation receives royal assent.

• Commercial property borrowing is untouched. Warehouses, industrial units, retail and the like remain available to SMSFs exactly as before.
  

And the scale is smaller than the noise suggests. On the government's own figures, SMSFs make up less than 1% of total residential property borrowing — and under half a per cent of new lending each year. This is a narrow change being reported as a seismic one.

Why you shouldn't redraw your whole plan off a headline

Based on the announcement yesterday, as long as contracts are signed within the next 45 days, the SMSF residential property acquisition will form part of the grandfathered pool.

How to think about it

A few principles we stand by, regardless of which way the policy lands:

The fundamentals come first — always. Location, rental demand, supply pipeline, the builder's track record, the numbers stacking up on their own merit. If a deal only works because of a tax structure or a super strategy, that's our cue to walk away, not lean in. Tax and structure enhance a good investment; they're never the deciding factor. That principle has never depended on any single government policy, and it doesn't now.

Beyond that, the right structure for your situation — SMSF, personal name, trust, or otherwise — is a question for your accountant and a licensed financial adviser. We're not licensed to give that advice and we won't pretend to be. What we can tell you is what we're seeing in the market but our main role is to understand your strategic goals and match the property to your aim, based on your structure and borrowing capacity.

What we're seeing

A clear shift for investors into well positioned, new builds that are exempt from both negative gearing changes and capital gains tax discounts. This asset class is likely to be the most attractive property type, moving forward, with the aim to create new supply for renters, thus easing the rental crisis.

The biggest challenge

What we hear the most from investors, is that they simply don’t have access to good property that is built by credible builders. Given that this has been Calla Property’s focus, since its inception in 2014, we have this covered. We have relationships with builders Australia-wide that have been developed for over a decade.

If you'd like to talk to the new build experts for Australian residential property, or to be introduced to one of our finance partners for financial advice — just reply to this email or book a time here.

We'll keep you posted as this develops.

This info is general and for illustrative purposes only. It doesn't take your personal financial situation into account and isn't intended as financial, legal, or tax advice. Any projections are just a guide based on third-party data. We always recommend checking in with your accountant or a licensed professional before making any investment moves.

Secure Your Next Steps Today

+61 485 976 989 | +61 482 080 189

Markets change. Regulations evolve. Strategic investors adapt.