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@@jackwsurfs Hi Jack, thanks for the comment and feedback :) Congrats on the purchase! Your situation is a little different in that it's not hurting you now as there's no home (that you live in) with non-deductible debt but if this changed, you would be disadvantaged and unfortunately wouldn't be able to unpick it. In the meantime, the funds are in redraw saving interest, which is better than paying interest, even if you do get a tax deduction. If you decided to use these funds (created equity) to buy shares or use as a deposit for another investment property, it would be deductible :) Hope makes sense and useful :)

Thanks so much for your quick reply! I have two follow-up questions, if that's ok. 1. If hypothetically I transferred the $80,000 into offset... which I may have done... but didn't spend it (i.e. I continued to grow my savings) - would the entirety of interest paid on the loan still be tax deductible? 2. To repay the "created equity", is it as simple as transferring the amount withdrawn back into the redraw account? I hope this makes sense. Thanks again for all your great content.

Thanks for additional follow ups and would be a few more considerations to give a propertly considered answer. Feel free to email me at kyle@edvest.com.au :)

@@kyle.edvest Thanks Kyle, have just sent you an email.

If the education expense is deductible, the interest cost and tax outcome would be the same before and after the current property becoming an investment property. Refinancing and splitting the loan is an option and would make the tacking easier. You need to know the portions to be split though which can change over time once there's been p&i repayments.

@@maspnmickle7283 thanks for your question. If you use equity to invest, that equity borrowed would be deductible. If instead that same equity was used for personal purposes e.g. New home purposes, or put in an offset and later used for personal purposes, it unfortunately wouldn't be tax deductible. Always good to get expert help if you're unsure :)

So if you have a paid off house, you can take a loan out on it to use as a deposit for 3 investment properties and the loan against your house the interest is tax deductible.

​@Hunty49 100% correct. You can take out a loan to use as a deposit for an investment property and borrow the remainder to be secured against the new investment property. Similarly, it can be borrowed to invest in shares or ETF's. Whilst often makes sense, taking on debt to invest naturally is taking on more risk. It's the purpose of the new borrowings that matter (e.g. To invest), not what those borrowings are secured against :)

@@random19911004 @random19911004 thanks for the good spot and apologies for the delay caused by me confirming with Vanguard my understanding but naturally wanted confirmation before posting publicly. The spread is an important consideration and is applicable on ETF's via Vanguard Personal Investor as with any other broker including Betashares Direct so no difference/consideration. Sorry for any confusion, covering Betashares Direct and Vanguard Personal Investor wasn't favouring one over the other, rather just a content decision cover Betashares Direct first as newer with little content on it. Will no doubt do one on Vanguard in the future. I've always been a fan of Vanguard Personal Investor although reservation has always been that only works for Vanguard products and didn't like their lack of TOFA on VGAD. This has now change recently so imagine I'll advised purely Vanguard portfolios on Vanguard Personal Investor more than I have in the past. Hope makes sense :)

@@dzhiurgis it's outside my jurisdiction and expertise however it'd be worth looking into and potentially getting local advice based on my general understanding of deductibility of interest in NZ on your home vs for investment purposes.

@@aflockofbears Thanks and glad found useful! Sing out if have any questions :)

@@Nerdificationing yes and is the exact same principle and I'd say the correct way to about it. Property transactions can happen quickly and can be a big mistake to take the quicker and simpler option of paying deposit with cash vs borrowing. In the past hasn't been considered as much as debt recycling with shares due to property more likely to be negatively geared and therefore unlikely to be surplus funds to pay down non deductible loan. Where interest rates are ATM, debt recycling into shares/ETF's is often negatively geared (even after considering franking credits) so the concepts are even more similar.

@@Nerdificationing Investing vs paying off mortgage (by keeping in offset) does increase risk as you're exposing yourself to the market vs the guaranteed return of your interest rate. Historically investors have been rewarded for taking this risk however there are periods where the justification of the decision is longer therefore is crucial is a long term strategy. Fortunately it doesn't have to be one or the other rather you can control the amount to invest and risk to take. For some it may be $0, for others the amount of offset, for others on high high risk spectrum may be offset plus equity release. If you were to invest anything, it would be worth debt recycling however and funding investment with debt/equity vs cash.

@@kyle.edvest Thanks! can you elaborate on the last bit? If I now have an extra 100k in cash, why would it be better to recycle 100k from the offset vs using the cash? If I recycle I'd be tax deducting the 6% interest, but with cash I'd be paying no interest?

@@Nerdificationing Sorry, not full story as didn't know you had more than the loan in the offset account. In this case there would be no current benefit in structuring debt so you could just invest the cash that is in the offset that's over offsetting the loan. Again, no immediate benefit, but if there's a chace in ever upsizing, and you have the borrowing capacity and willing to go through application, you could borrow the additional $100k against the home, use these funds to invest and out $100k that's currently over offsetting the loan against this new loan. If you ever needed the $100k for personal reasons/buy another home and you need the funds, you can take out of the offset account and the interest is deductible vs if you borrowed it after the fact (having invested the cash) it wouldn't be as was for personal purposes. Hope makes sense :)

@@ace1-n2q both options offer diversified portfolios and I'd always be cautious to claim one investment objectively "safer" than the other however both of these offer greater diversification than just the US market, Vdhg in particular due to inclusion of bonds with less correlation to the other asset classes. As a result, they are less volatile than the S&p500.

@@bretcansfield3858 Good spot! When they launched and when I recorded this video they only supported apps. A welcome addition is the desktop/website access if you're anything like me and prefer doing things like this when sitting at a desktop!

Thanks Will!

Thank you!

@@VikramG9 Thanks Vikram :)

No, Australia doesn't have inheritance tax. But there are two things to consider: superannuation and CGT on assets you inherit and later sell. There are some complex rules here around your situation and timing, so speak to your financial advisor or accountant if these apply to you.

@@kyle.edvest Thank you!

Thank you!

Thanks for the comment! Debt recycling works by converting non-deductible debt into tax deductible debt. Since the mortgage on an investment property is almost certainly already tax deductible, there's nothing to convert and doing so would make your deductible debt level exactly the same. So debt recycling only works on non-deductible debt, which is almost always against the main residence.

Email kyle@edvest.com.au and I'd be happy to see if I can help.

It's competitive in that it offers cheap brokerage. However, it doesn't particularly stand out to me as it isn't a huge price different in brokerage vs others and it doesn't have any automation features. I'd like to see more of a track record from them/their underlying company to make it make sense. They do appear to have more trader focused features, which could appeal to some, but isn't a focus for me.

Nice! What are your first impressions?

@@kyle.edvest Really good! The app is intuitive and modern looking, and I only invest in Elf's, so the $0 brokerage is fantastic. I am thinking of moving all my holdings from CommSec Pocket if I can stomach the transfer fees

You can and you've still borrowed to invest and can deduct the portion of interest. However, you've created a mixed loan and the calculation of the portion doesn't remain fixed (assuming P&I), so it's an ongoing headache for you (and possibly your accountant). I'd advise to structure separately initially. This will save yourself time, stress, and possibly errors in the future.

The 25% rate is only for small- or medium-sized companies. Large companies have a 30% tax rate. Most investors who receive franking credits do so from large companies, hence why I used the 30% rate in this example.

Thank you!

Yes, and the refund is actually bigger than the benefit shown as you give some of it back when the super funds pays the contribution tax. This is a good addition I'll look at adding. Example, if you're marginal tax rate is 39% and you contribute $10,000. Your refund as a result of the contribution will be $3,900 and this comes to you personally. The super fund pays 15% contribution tax, $1,500. The benefit is the different, $2,400. I note it's important you don't consume the $3,900 on spending you wouldn't otherwise incur :)

@@kyle.edvest Thank you. If I received a small inheritance and wanted to add it to my Super, it would be reduced within my Super due to the tax. Once the refund came, should I then add the difference in as a non-concessional contribution to make sure the full inheritance is in there?

You never want to contribute to the point where your income is below the tax free threshold (18,200 or a bit higher depending on your age after accounting for Government offsets). This is because you pay 15% contribution tax whereas you'd otherwise pay 0% tax at that income level. The calculator accounts for these thresholds to ensure you don't contribute more than optimal. Hope makes sense and thanks :)

@@kyle.edvest Ahh i see yes that clears it up thank you sir!

No problems!

My pleasure! Glad you found it helpful

Thanks for watching! It would really depend on your situation, but here are two of my past videos that may be relevant for 18-25 year olds: 1) Low-cost diversified ETF portfolios - czcams.com/video/eCeWkxwGglM/video.htmlfeature=shared 2) Best high-interest savings accounts - czcams.com/video/AIgzt-mmUXY/video.htmlfeature=shared It's great that you're interested in investing while young. When you start early, the benefits of compound interest are on your side. Best of luck!

Without knowing your situation (tax, cost base, VAS value, mortgage value) it's hard to say definitely however when working with customers it's often a consideration. You likely will have some capital gains tax to pay; however, the annual savings of debt recycling often will make up for the initial cost. One step backwards, 2 steps forward. To see how much you'd save, download the debt recycling calculator on edvest.com.au Just remember to avoid reinvesting in the same investment as doing a strategy for the sole purpose of tax savings is a no no. Fortunately there's plenty of quality alternate ETF's.

Indeed! I suspect it's under-utilised because it can seem a bit confusing, but with the right roadmap it's actually fairly easy to understand/implement.

It's not the end of the world, just a little bit of an admin hassle/stress so you'd rather avoid. Anything over $27,500 will effectively be added to your income and taxed there, and you'll get a 15% accounting for the contribution tax, so you're in the same position. You then have the option to release it. If you don't, it's counted towards your non-concessional cap. If doing via salary sacrifice, where have less control, I'd leave a buffer you're comfortable with and do a personal member contribution to the fund pushing you slightly over $27,500. After 30 June when you know the exact contributions have gone in, you can submit a notice of intent to claim a tax deduction to the amount up to $27,500, and anything leftover will just be treated as a non-concessional contribution. There's a little bit more involved and is harsher if you exceed your non-concessional cap. If you're pushing the caps of your concessional contributions and your non-concessional contributions, you'd need to be extra careful as it would be less ideal to have your non-concessional cap absorb your excess concessional contributions.

@kyle.edvest Thank you for taking the time to write that incredibly detailed response. It is very much appreciated! Being in a position to exceed my non concessional cap isn't a worry at this stage, sadly. Thanks again, subbed.👍

@@ZENbulldozer No problems. Thanks and best of luck!

Glad you found it useful :)

Indeed!

Thank you!

Thanks for the question. The contribution is the first thing you need to do and needs to be in the account BEFORE 30 June and allow for processing. Most funds provide their 30 June deadlines but I find it can start to get stressful, not impossible, if you haven't started the process by say 20 June. The notice of intent (to claim the tax deduction) doesn't need to be done by 30 June rather just needs to be done the sooner of: doing your tax return for 2023/24, 30 June 2025 or rolling over/withdrawing from your super fund (at odd chance is applicable). I'd probably just wait until 1 July (when all other contributions are known) and then just get out of the way.