Compare leaving a lump sum in your offset account with paying it off your home loan, redrawing it and investing it, using assumptions you control.
Home › Offset vs Debt Recycling Calculator
Illustrative only, using your assumptions held steady every year. Ignores franking credits, fees, transaction costs, rate changes and selling early. Capital gains tax applies the rules from 1 July 2027 (cost base indexation and a 30% minimum rate on real gains) to the whole gain; gains accrued before 1 July 2027 keep the 50% discount, which is not separated out. A negative year 1 cash flow is a top-up from your own money. Not financial or tax advice.
Request a Call With Alex →Both paths start with the same cash and the same home loan. If debt recycling is new to you, our guide to debt recycling covers the basics.
Each year, investment income less the after-tax cost of the investment interest goes onto the home loan. If income falls short, you cover the gap from your own cash flow.
At the end, the investments are sold, tax is paid and the investment split is repaid. The redraw must come from a split used only to invest, which is how we structure debt recycling loans.
| Input | Default | What it means |
|---|---|---|
| Cash to compare | $100,000 | Surplus cash in your offset |
| Home loan rate | 6% (assumed) | Used for the offset saving and the investment split |
| Years | 10 | How long you hold before selling |
| Marginal tax rate | 39% | 37% plus the 2% Medicare levy |
| Income yield | 4% a year (assumed) | Dividends or distributions |
| Growth | 4% a year (assumed) | Change in the investment's value |
| Inflation | 2.5% a year (assumed) | Consumer price index (CPI) rise used to index the cost base |
These are assumptions to test, not forecasts. Investment values can fall as well as rise, and the calculator holds every input steady for the whole period.
In year one, $4,000 of income is below $6,000 of interest, so you cover $1,220 from your own cash after tax. Over 10 years the results are:
| Result after 10 years | Amount |
|---|---|
| Offset path | $179,085 |
| Debt recycling path | $208,955 |
| Capital gains tax already deducted | $7,806 |
Drop growth to 1% a year and the offset path finishes about $4,300 ahead. Small changes in assumptions can flip the answer.
From 1 July 2027, the 50% capital gains tax discount for individuals is replaced by cost base indexation and a 30% minimum tax rate on real gains. The change is now law, and the Treasurer's second reading speech says it applies to all capital gains tax assets, including shares.
Indexation lifts your cost base with inflation, so only the gain above inflation is taxed. The calculator taxes that real gain at your marginal rate or 30%, whichever is higher. You must hold an asset for at least 12 months to qualify for indexation.
Gains that build up before 1 July 2027 keep the 50% discount, but the calculator treats the whole gain under the new rules. Our guide to debt recycling and capital gains tax explains the change in more detail.
The calculator does not include franking credits, fees, transaction costs, changing interest rates or selling early in a downturn. Returns arrive smoothly in the model, unlike real markets.
It also cannot tell you whether you could live with the investments falling while the debt stays the same. For when an offset is the better home for your cash, read debt recycling vs an offset account.
We arrange the lending side. Alex Gee, our debt recycling mortgage broker, can confirm whether your loan can recycle and how the splits would be set up.
An offset gives a certain saving at your loan rate, with no tax on it. Debt recycling only comes out ahead when the after-tax return on the investments beats the after-tax cost of the investment loan, and that outcome is not certain.
Use the calculator to see how sensitive the answer is to growth, income, tax and time, then test the result with your adviser and tax agent before moving any cash.
Book a free call with Alex to check whether your loan can recycle and how the splits would work.
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It depends on your timeframe, tax rate, cash flow and the return you assume. An offset gives a certain saving at your loan rate, while debt recycling comes out ahead only if after-tax returns beat the after-tax cost of the investment loan.
It keeps the comparison simple. Investment splits may be priced differently from your home loan split, so adjust the assumption if your rates differ.
No. It applies the rules starting 1 July 2027: cost base indexation and a 30% minimum rate on real gains. Gains accrued before that date keep the 50% discount, which the calculator does not separate out.
No. Franking credits can lift the after-tax income from Australian shares, so the debt recycling result may be understated if your investments are franked.
You can, but that is investing your own savings, so there is no borrowing and no interest to deduct. Debt recycling needs the cash to pay down the loan first and then be redrawn from a separate investment split.
Use how long you expect to hold the investments. Shorter periods leave less time for growth to outweigh the loan cost, and assets must be held at least 12 months to qualify for indexation.
Use our debt recycling equity calculator to see your current LVR, usable equity under an 80% limit, and how much you could consider recycling.
Read more → GUIDECompare an offset account with debt recycling across certainty, tax, access to funds, investment risk and the option of a hybrid approach.
Read more → GUIDEUse a hurdle-rate framework to explore when debt recycling may or may not be worthwhile, including borrowing costs, tax and investment returns.
Read more →
1. Arranged a loan when our small business situation made it difficult to qualify.
2. Met requirements to have funding available by a specified date.
3. Understood my needs to setup debt recycling to allow tax structuring.
4. Communicated well throughout.
I would use their services again.
Alex, Jess and the Kingfisher team were second to none and their process from start to finish was faultless. As a self-employed business owner, it can be difficult to obtain finance at the best of times. The Kingfisher team made this an easy and efficient proposition and their continued transparent and efficient communication ensured we were kept up to date at all times. Highly recommend them for your finance needs!
Alex and Jess dealt with our investment loan and provided a top tier service. They kept us up to date and communicated every step of the process making it a seamless and smooth experience! Awesome work team we will definitely be back for future loans!
Jess from Kingfisher was outstanding. I couldn't fault her communication, expertise or dedication to finding the best loan for our situation. The entire process was seamless from start to finish. We'll definitely be using Kingfisher again in the future. A top-tier organisation.
