A professional couple cleared $350,000 of non-deductible debt, created a deductible investment facility, and have since recycled a further $80,000 on their own.
Home › Case Studies › $350K Recycled Through Shares
A couple in senior corporate roles, one in asset management and one in tech sales. Each owned an investment property before they bought their home together, and they had built a $550,000 share portfolio with no debt against it.
They had researched debt recycling and knew the strategy they wanted. They needed a specialist debt recycling broker to implement it properly.
$320,000 of borrowing secured against their two rentals had funded their home deposit. Deductibility generally follows what borrowed money is used for, not the property securing it, so none of that interest was deductible. Their share portfolio sat unencumbered alongside it.
| Property | Value | Facility | Purpose |
|---|---|---|---|
| Home | $1.65m | $1.2m loan | Non-deductible |
| Investment 1 | $650k | $400k investment loan | Deductible |
| Investment 1 | — | $150k owner-occupier split | Non-deductible (funded the home deposit) |
| Investment 2 | $770k | $385k investment loan | Deductible |
| Investment 2 | — | $170k owner-occupier split | Non-deductible (funded the home deposit) |
| Shares | $550k | — | Unencumbered |
When they bought their home, their previous bank advised drawing equity from each investment property to fund the deposit. It got the purchase done, but left non-deductible debt sitting against the investments.
We refinanced the home and both investment properties to Macquarie and structured the recycle around the plan the couple brought to us:
| Metric | Figure |
|---|---|
| Lender | Macquarie |
| Approval timeframe | 2 business days |
| Repayment type | P&I, both splits at 5.89% |
| Non-deductible debt cleared (initial) | $350,000 |
| Deductible investment debt created (initial) | $325,000 |
| Further debt recycled after 3 months, no new application | $80,000 |
| Non-deductible home loan balance, current | $920,000 |
| Deductible investment debt, current | $405,000 |
| Non-deductible split left on Investment 2 (to clear later) | $170,000 |
$405,000 of deductible debt at 5.89% generates about $23,855 of interest in year one. With both partners on the top marginal rate (45% plus the 2% Medicare levy, on income over $190,000), the anticipated combined saving is $11,212 a year, subject to confirmation by their accountant.
| Figure | |
|---|---|
| Annual interest on $405,000 at 5.89% | $23,854.50 |
| Combined marginal tax rate | 47% |
| Combined anticipated tax saving | $11,211.62 |
| Partner 1 anticipated saving (50/50 split assumed) | $5,605.81 |
| Partner 2 anticipated saving (50/50 split assumed) | $5,605.81 |
*Interest on a P&I loan falls as principal is repaid, so the deduction reduces over time. Tax outcomes are subject to advice from your accountant.
Extrapolating the $11,211.62 annual tax saving, redirected as extra repayments against their combined $1,090,000 non-deductible debt ($920,000 home loan + $170,000 remaining Investment 2 split) at 5.89% P&I:
Assumptions: 30-year loan term, rate held flat at 5.89% for the full period, extra repayment applied monthly ($934.30/month) and redirected 100% at the non-deductible debt, and the $11,211.62 saving held constant each year. In practice it would likely grow as they keep recycling, so this is a conservative floor, not a ceiling.
| Year | Balance without extra repayments | Balance with extra repayments | Interest saved to date |
|---|---|---|---|
| 5 | $1,012,904 | $947,901 | $8,944 |
| 10 | $909,480 | $757,278 | $40,086 |
| 15 | $770,739 | $501,559 | $101,005 |
| 20 | $584,618 | $158,515 | $201,871 |
Left untouched, the loan runs the full 30 years and costs $1,234,957 in total interest.
Redirecting the tax saving every year clears it in 21.9 years, 8.1 years early, and cuts total interest to $852,110.
Total interest saved over the life of the loan: $382,847
Illustrative projection on the stated assumptions only, not a forecast or a promise of any result. Rates, tax law and the clients' circumstances will change.
Contact us if you're looking for a debt recycling mortgage broker who can restructure lending across a home and an investment portfolio.
Planning a similar move? See how we approach refinancing for debt recycling and debt recycling with shares and ETFs.
Talk it through with a specialist broker, or run your own numbers first.
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