Federal Budget 2026: An SMSF opportunity?

The Labor government’s 2026 Budget announcement was one of the most consequential in a generation, with a major overhaul of the property tax regime having widespread consequences for property investors.

To recap: The centrepiece of the reforms is a cap on negative gearing, which will be limited to new residential builds from July next year. Existing residential properties with negative gearing will be 'grandfathered', meaning they will not be affected going forward. This includes in-pipeline deals that are yet to be settled.

The existing 50% capital gains tax discount will simultaneously be replaced by inflation-adjusted indexation – restoring the pre-Howard policy of taxing real gains rather than paper gains inflated by rising prices. New builds will, however, retain the option to use the 50% discount, a carve-out designed to keep investor appetite for new housing supply intact.

But while the Budget has dramatically changed the Australian property investing scene, SMSFs are largely unaffected.

Within a complying SMSF, the existing settings remain unchanged. The concessional 15% tax rate on fund income remains, as does an effective CGT rate of 10% (thanks to a 33% discount) on assets held for more than 12 months.

“The proposed restriction on negative gearing, where losses can only be offset against income from the same asset, also does not apply to complying SMSFs,” noted Richard Chesworth (pictured, left), SMSF guru and head of specialised distribution at Bluestone Home Loans.

In fact, the changes announced in the Budget may result in some unique opportunities for SMSFs seeking to borrow. As Chesworth said: “A key benefit of acquiring an established property in an SMSF is the reduced speculative risk of buying an established property with settlement in six weeks, rather than 12 months [which is a common lead time for new builds].

Barry Saoud (pictured, right), Pepper Money’s chief executive of mortgages and commercial lending, reckons brokers should expect more conversations about how investments are structured, not just what is being bought.

“For some investors, that will mean looking beyond individual ownership and becoming more comfortable with lending in companies, trusts and self-managed super funds (SMSFs),” said Saoud.

“SMSF property investing is likely to attract interest from a smaller group of “sophisticated, longer-term investors”, Saoud predicted, thanks to SMSFs continuing to benefit from favourable tax treatments.

Read more: Federal Budget 2026: What it means for SMEs

However, Saoud warned that super fund lending “remains a specialist strategy. It comes with strict compliance requirements, contribution limits and advice obligations, and it won’t suit every client”.

Nonetheless, it’s likely some high-net-worth or strategic investors will at least explore super funds or alternative ownership structures to manage tax outcomes. “That puts more responsibility on brokers to understand how these structures work, and to partner with lenders who can support them with helpful loan options,” said Saoud.

Broker expertise needed

“Brokers' phones will be ringing hot, and there are three conversations worth having immediately,” said Chesworth.

1. Reassure existing investors: Negatively geared properties are protected under grandfathering

2. Flag the transition window for investors with deals in the pipe: Investors considering established property purchases have until 1 July 2027 to lock in negative gearing under current rules. This is for properties where a contract has been entered into but not yet settled.

3. Reframe the opportunity: New builds retain full negative gearing benefits indefinitely. However, from an SMSF perspective, it may present more compelling reasons to focus on established properties, given the CGT and negative gearing environment remains unchanged

Saoud believes brokers who move quickly will be able to help investors navigate change and lock in opportunities before transitional settings expire. “Over time, success will increasingly depend on structural knowledge – understanding different ownership vehicles, lending outside personal names, and when non-bank options make sense,” he said.

He outlined five key takeaways for brokers:

1. Act quickly on investor demand: “Reach out to investor clients now, explain what’s changing and move fast to progress deals within transitional windows.”

2. Lift capability around ownership structures: “Expect more conversations about lending in companies, trusts and super funds. Familiarity with non-personal structures will be a growing differentiator.”

3. Use specialist strategies selectively: “Options like super fund property lending can make sense for the right clients, but only with proper advice and the right lending partners.”

4. Lean into new-build and construction finance: “Policy settings are pushing demand toward new housing. Make sure your construction offering and lender panel is up to scratch.”

5. Keep the wider environment in view: “Interest rates, funding costs and economic uncertainty still shape borrowing capacity and risk. Loan options need to reflect the full picture, not just tax changes.”