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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What Debt Recycling Actually Does
- Debt recycling converts non-deductible home loan debt into tax-deductible investment debt without increasing overall borrowing.
- The strategy is primarily a tax strategy rather than an investment strategy and hinges on repurposing existing debt.
How To Execute Debt Recycling
- Pay spare cash into your home loan, then redraw or split that amount into a separate investment loan and invest it in income-producing assets.
- Keep the total debt unchanged and ensure the borrowed funds are used for investments that aim to produce income.
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.