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Debt recycling involves splitting your home loan, using spare cash to pay down one portion, then redrawing those funds to invest in income-producing assets like shares or property. The redrawn amount becomes tax-deductible investment debt, while the remaining home loan stays non-deductible. This transforms non-deductible debt into tax-deductible debt while building wealth through investments.

Key benefits include: tax deductions on investment loan interest, potential for higher investment returns than mortgage interest rates, faster wealth accumulation, maintained mortgage repayment timeline, and leveraged exposure to growth assets. The tax savings can be reinvested to compound your returns over time.

Main risks include: investment values can fall below the debt amount, interest rate rises affecting both loan portions, potential cash flow strain if investments don't generate enough income, and market volatility impacting your investment portfolio. You're also increasing your overall debt level through redraws. Consider your risk tolerance and ability to service increased debt carefully.

Yes, it's crucial to keep investment debt separate for tax purposes. Set up a split loan facility with separate accounts - one for your home loan and one for investment debt. Use the investment loan account for all redraws to invest, and link it to a separate offset account. This ensures clear records for the ATO and maximizes your tax deductions.

Focus on income-producing assets like dividend-paying shares, diversified ETFs, managed funds, or investment property. Avoid speculative investments or assets that don't generate regular income. Australian shares with franking credits are particularly attractive due to potential tax benefits. Consider your risk tolerance and investment timeline.

Yes! The calculator now supports existing debt recycling positions. Simply enter the amount of mortgage debt you've already converted to investment debt in the "Existing Debt Recycled Amount" field. For example, if you recycled $100,000 two years ago, enter 100000. This represents the debt amount, not the current value of your investments. The calculator will include this in your tax deduction calculations and show accurate projections going forward.

This depends on your goals and cash flow situation. Paying down the mortgage reduces non-deductible debt and provides guaranteed returns equal to your mortgage rate. Reinvesting dividends potentially offers higher long-term growth but increases market exposure. Many people split the difference or adjust based on market conditions.

Enter your current holdings and target allocations, and the calculator shows exactly what trades to make. It fetches real-time ASX prices when you use ticker codes, calculates precise share quantities, and accounts for additional cash you want to invest. Perfect for maintaining your desired asset allocation over time.

Most investors rebalance quarterly or semi-annually, or when allocations drift more than 5-10% from targets. Frequent rebalancing increases transaction costs, while infrequent rebalancing lets allocations drift too far. The calculator's threshold setting helps you decide when rebalancing is worthwhile.

Currently supports Australian and New Zealand tax calculations using current tax brackets and rates. The debt recycling calculator accounts for progressive tax rates, while the portfolio rebalancer works with ASX-listed securities for real-time pricing and share calculations.

Franking credits are essentially tax refunds from Australian companies. When Australian companies pay corporate tax (30%) on their profits before paying dividends to shareholders, they attach "franking credits" representing the tax already paid.

Example: If you receive $70 in fully franked dividends, the company actually earned $100 but paid $30 in tax. You get the $70 dividend plus a $30 franking credit, totaling $100 of taxable income. If your tax rate is 37%, you pay $37 tax on the $100, but get the $30 franking credit back, so you only pay $7 net tax.

Why this matters for debt recycling:

• Australian shares typically provide 60-80% franked dividends
• Higher income earners benefit more from franking credits
• The tax savings from debt recycling + franking credits can significantly boost returns
• This makes Australian shares particularly attractive for leveraged investing

Debt recycling example with franking credits:

Result: Franking credits boost your annual benefit from $370 to $1,126 - that's an extra $756 per year!

In our calculator: Set your Australian shares percentage (30% is typical) and franking rate (70% average) to see the combined benefit of debt recycling + franking credits.

No, these calculators are educational tools only and don't constitute financial advice. They help you model different scenarios and understand potential outcomes. Always consult qualified financial advisors, accountants, and mortgage brokers before implementing debt recycling or making significant investment decisions.