103. Debt Recycling Strategy

Welcome back to another episode of the 360 Money Matters Podcast!
In this episode, we discussed debt recycling, a method of turning owner-occupied debt that is not deductible into deductible debt in order to pay off your mortgage quicker. By withdrawing equity from a property and using it for investments, debt can be transformed. The debt that is not deductible is subsequently paid off with the investment proceeds.
Discover how to turn non-deductible debt into deductible debt, accelerate your mortgage payments, and make informed decisions about your financial future. Don't miss out on this opportunity to take control of your finances and build a brighter tomorrow!
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This podcast contains information that is general in nature. It does not take into account the objectives, financial situation, or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. This information is provided by Billy Amiridis & Andrew Nicolaou of 360 Financial Strategists Pty Ltd, authorized representatives and credit representatives of AMP Financial Planning - AFSL 232706
Episode Highlights
What is debt recycling
Owner occupied debt
Good debt and bad debt
Implementing debt recycling and how does it work
About managing debt and overall strategy
Criteria for considering debt recycling
How to utilize debt recycling and its benefits and risks
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[@ackielace]

Great information 👍 Thank you.

[@ohayes86]

Very insightful thank you gentleman

[@unclelive6918]

What if you invest in long term eft like sp500? Can you still tax deductible? On what but ?

[@mp13r17]

I think the ato specifies there has to be an expected dividend to make it qualify for investment purposes, but I may be wrong. I'm just looking into it myself, as only been investing own funds for the last 28years....never done debt recycling before.

[@lengerer]

It's only worth it to get dividends paid out and put into your home loan.
Interest on a line of credit is about 8%, that's very high interest to hope your growth on shares is higher.

[@redcorvetteguy]

Hello, around 7:50 you mention that debt deductablity is based on the purpose of loan. so if i have a rental property and then move into it and it becomes my PPOR, is that debt still technically tax deductable? Are you refering to australian tax? thanks

[@albertjoseph9684]

Not deductible

[@unclelive6918]

Do you pay tax on the dividends you earn ?
You kept saying tax deductible?? Deductible on what ? How much deductible tax we are talking about ! ?

[@lengerer]

You pay tax on dividends
The interest on the line of credit becomes a tax deduction. Say you have 100k credit to buy high div ETF
100k credit will cost $8000 interest PA (8% interest rate on credit).
$8000 is tax deductible
The dividends paid out on the ETF you purchased are put into your home loan reducing your interest paid.
100k high div ETF will pay out about $7000 in dividends.