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Case study · Debt recycling
A Head of Sales who turned $700K of home loan into tax deductible debt.
Around $620K a year in base, bonus and RSUs. Every vest felt like a tax hit, and the mortgage gave nothing back.
Names and details changed for privacy. General information only.
$620K
Base, bonus and RSUs a year
$700K
Home loan, not tax deductible
$117K
Less taxable income
$55K
Back in his pocket
How it works
How debt recycling works, in 75 seconds.
A general example, not this client’s numbers. General information only.
Their road map
From where they were, to where they wanted to be.
Case study · Debt recycling
The Head of Sales
Busy paying down the mortgage. Felt like he was working for the ATO.
Step 1 · Now
Where they started
| Income | Around $620K |
| Tax rate | Top rate on every vest |
| Home loan | $700K |
| Home loan interest | Not tax deductible |
| Investments | All in his own name |
| Trust | None |
| Tax planning | Left until June |
What we found
- Paying top rate tax on every RSU vest
- $700K of home loan with no tax deduction
- Everything in his own name, so nothing to share the tax
Step 2 · Where
Where they wanted to be
Their goals
- Stop dreading tax time
- Build wealth, not just pay the bank
- Retire early
The goal
$55K
Back in his pocket in the first year.
Step 3 · How
What we did, and who did it
- Debt recycling, turning $700K of home loan into tax deductible investment debt
Us - A line of credit set up against the home, kept separate from the home loan
UsBroker - A family investment trust for new investments, to cut the overall tax rate
UsAccountant - 12 months of investment loan interest prepaid before 30 June
Us - RSU sell down planned around his vest dates
Us - Investments and trust set up correctly from day one
UsAccountant - Long term passive income plan modelled
Us
One combined strategy. Everything in one place.
Names and details changed for privacy. Results depend on your circumstances.
The result
$55K
Back in his pocket, with taxable income down $117K.
- $700K of home loan now tax deductible
- Taxable income down $117K
- $55K back in his pocket
- The same money now building wealth
I used to hate June. Now I look forward to it.
Sound like you?
Paying down the mortgage while your RSUs get taxed at the top rate?
If this sounds like you, let’s talk. 15 minutes, no cost, no obligation.
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