If your income runs through a trust or company, varies year to year, or comes from your own business, debt recycling can still work cleanly. Structuring it well is our specialty.
Home › Debt recycling for self-employed
Debt recycling turns the non-deductible debt on your home into deductible debt used to invest, so that over time your home loan reduces while you build an income-producing portfolio. If you run your own business or work for yourself, two things generally work in your favour.
First, business owners often carry a higher and more flexible income than the salary they draw, which is exactly the position where the tax deduction on investment interest is worth the most. Second, you tend to have more control over cashflow timing than a PAYG employee, which helps with the discipline the strategy needs.
The catch is not the strategy, it is the paperwork and the way lenders read non-PAYG income. That is where a specialist broker earns their place.
Non-PAYG income is our lane. Complex and variable income, trust and company structures, and add-backs are the cases most brokers find hardest. Founder Alex Gee builds these structures regularly and coordinates with your accountant so the lending and the tax position line up.
PAYG applicants hand over two payslips and a group certificate. For the self-employed, a lender wants to see that your income is real, ongoing and strong enough to service the loan. In most cases that means more evidence, not more difficulty, once it is presented properly.
Depending on your structure and the lender, the typical evidence includes:
The difference between an approval and a decline is often how the income is packaged, not the income itself. Two lenders can look at the same tax returns and reach very different serviceability numbers depending on how they treat add-backs, retained profits and the most recent year versus the average.
We assess how your structure and returns present to lenders before you apply.
Book a free call →Many business owners hold their home, their business and their investments across different entities: a family trust, a company, a self-managed super fund, or their own name. Debt recycling has to respect those boundaries, because the interest deduction depends on who borrows the money and what it is used for, not on which property secures the loan.
As a general principle, the entity that borrows to buy an income-producing asset is the entity that can claim the interest, and that entity needs to be the one that receives the investment income. Getting this alignment right is a decision for you, your accountant and a registered tax agent. We structure the lending to match the plan they set; we do not decide your entity structure or recommend which investments to buy.
In practice this means we keep the home loan and the investment borrowing in separate, clearly named splits, and we make sure the borrowing entity and the investing entity are the same, so the deduction trail is clean from the first dollar drawn.
Debt recycling relies on redirecting spare cash and any tax refund back into the home loan, then recycling it into the investment split. For someone on a steady salary that rhythm is easy. For a business owner whose income arrives in lumps, it needs a little more planning.
The usual approach is to size the recycled amounts to your quieter months, keep a healthy cash buffer for tax and BAS obligations, and recycle in tranches rather than all at once. You do not need perfectly smooth income to debt recycle, you need a realistic buffer and a plan that survives a slow quarter. We build the structure with that flexibility in mind, and your adviser sets the investment pace.
If a few of the less-suitable points apply, it usually means wait rather than never. We will tell you honestly if the timing is not right.
We look at your returns, financials and structure, and estimate borrowing capacity and usable equity, before you commit to anything.
Lenders treat self-employed income very differently. We select one whose policy on add-backs, structures and splits fits your situation.
Separate, clearly named splits for the home loan and the investment borrowing, using redraw rather than offset on the investment side, with the borrowing entity aligned to your plan.
We make sure the lending structure supports the tax position your accountant and adviser are aiming for, so nothing is left to chance at tax time.
Debt recycling is a leveraged strategy that uses your home as security, and the tax treatment depends on your circumstances and current law. Please confirm your position with a registered tax agent before you begin.
A free, no-obligation call with a specialist who works with self-employed borrowers every week.
Book a free call →Generally yes. Variable income is common among the self-employed, and lenders typically assess it over one to two years. The key is sizing the recycled amounts sensibly and holding a cash buffer, which we plan for when we structure the loan.
It varies by lender, but two years of tax returns and financials is common, with some lenders considering one year in certain cases. We match you to a lender whose evidence requirements suit where your business is up to.
No, but it does need care. The entity that borrows to invest generally needs to be the entity that receives the investment income for the interest to be deductible. We structure the lending to match the plan your accountant sets. See our loan structure page for how the splits are built.
Yes, we recommend it. We arrange the lending; your accountant or registered tax agent confirms deductibility and your entity setup, and your financial adviser recommends the investments. We coordinate with them so everything lines up.
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