Get Rich Slow Club 202. The tax trick that turns your home loan into an investment
Oct 6, 2025
Discover how debt recycling can turn your mortgage into a money-making machine! The hosts unravel the process of converting non-deductible home debt into tax-deductible investment debt. Learn about tax benefits that can significantly reduce your overall borrowing costs and the importance of clean accounting. They also explore the risks associated with different loan types and offer essential tips on what assets to invest in. Plus, get insights into whether debt recycling is right for you, including key factors to consider before diving in!
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Tax Cuts Lower Effective Interest Cost
- Converting a loan’s interest to tax-deductible effectively reduces your interest cost by your marginal tax rate.
- This tax saving compounds over time, magnifying benefits for higher tax brackets.
Keep Loans Separate And Documented
- Always split loans and create a separate documented investment loan so you can clearly claim deductions and simplify tax reporting.
- Consult your accountant and mortgage broker before restructuring to ensure lenders and the ATO accept the setup.
How To Scale Debt Recycling Over Time
- Re-split your loan periodically: pay extra into the home loan then redraw that amount as a new investment loan to keep debt level unchanged.
- This iterative process preserves total borrowing while converting more of the balance into deductible investment debt.