From 10 August 2026, self-managed super funds can no longer borrow to buy residential property. The window is closing fast, and many investors who had been weighing up a geared property in super are acting now while it is still open.
However, the ban is narrower than the headlines suggest. It is really a ban on borrowing to buy anything that is not business real property. Genuine working farms sit firmly on the right side of that line.
Why farms are treated differently
A farm used in a real primary production business qualifies as business real property. That means a fund can still borrow to acquire it through a limited recourse borrowing arrangement, even after the residential ban commences. There is no race against the 7 August contract deadline. The option stays open.
Business real property also unlocks concessions that ordinary residential property never gets:
- It is the only kind of property a fund can buy from a related party at market value, which is how many farming families move their own land into their fund.
- It can be leased back to the family farming business, provided the rent is on arm’s length terms.
- The fund is taxed at just 15 per cent on rental income in accumulation, and that rent can become tax free once members move to pension phase.
- Fund assets are generally protected from members’ creditors.
The part that surprises people
With almost any property in super, no member or relative can ever live in it, even at full market rent. Doing so breaches the sole purpose test, and the penalties are steep.
A genuine working farm is the rare exception. Because the whole property is treated as business real property, a member or their family can actually live in the farmhouse. The conditions are strict. The residential area needs to stay within 2 hectares, farming has to remain the main use of the land, and market rent must be paid under a proper lease. The fund still has to satisfy the sole purpose test, so it needs to be set up and documented correctly.
This is not a loophole. The ATO’s own ruling on business real property, SMSFR 2009/1, works through an example of a couple who own a 10 hectare vineyard with their home built on half a hectare of it. Their fund acquires the property, home included, and leases it back to them. The whole property is treated as business real property. It is a well-trodden path, not a grey area.
Where it gets tricky
The rules reward genuine farms and shut out everything else. Hobby farms and lifestyle blocks do not qualify. The land has to be in real business use at the time it is bought, not at some point down the track. And the 2 hectare limit is a hard edge. In another example in the same ruling, a cattle farmer who used around 3 hectares for her home, garden and grounds fell outside the definition entirely.
Many rural families are reviewing their structures now, while the line between what is allowed and what is banned is fresh.
Let’s talk it through
If a farm or primary production property is part of your wealth picture, it is worth understanding how these rules apply before the residential window closes and the noise settles. We are happy to walk through how business real property works inside a self-managed super fund, and what it can and cannot do.
About SMSF Financial Solutions
SMSF Financial Solutions is a specialist self-managed super fund firm based on the Gold Coast, Queensland, working with clients across Australia. The firm focuses exclusively on SMSFs, covering establishment, administration, compliance and investment support. It operates under a general advice model.
Media Contact
Jason Bibby
Managing Director SMSF Financial Solutions
Email: [email protected]
Mobile: 07 3186 9799
Media enquiries and interview requests welcome. Jason Bibby is available for comment on SMSFs, superannuation and property investing.
