Debt Recycling Calculator Australia
How to Use the Australian Debt Recycling Calculator
Input your current non-deductible home loan balance, usable equity amount to recycle, mortgage and investment split interest rates, your Australian marginal tax rate (including the 2% Medicare Levy), expected dividend yield, and capital growth rate.
Australian Tax & Loan-Splitting Assumptions (ITAA 1997 s 8-1)
Assumptions: Models a clean split-loan facility where paid-down home loan equity is re-borrowed in a separate investment split to purchase income-producing assets, and all investment income plus tax deductions are swept back onto the non-deductible home loan.
Worked Example: Recycling $100,000 of Home Loan Debt at the 39% Tax Bracket
Worked Example: Recycling $100,000 at 6.19% p.a. for an investor in the 39% tax bracket (37% + 2% Medicare Levy) converts $6,190 of non-deductible interest into a tax-deductible expense—generating a $2,414 annual tax benefit plus $4,200 in dividends (at a 4.2% yield) to pay down the remaining home loan faster.
Frequently Asked Questions About Debt Recycling in Australia
Read our complete 13-minute guide on clean loan splitting and ATO TR 2000/2 rules at /guides/debt-recycling-australia-guide.
Does debt recycling increase my total debt?
When you recycle paid-down equity ($1 of non-deductible debt paid off for every $1 re-borrowed in an investment split), your total debt remains unchanged while a growing share becomes tax-deductible.
Why must I split my loan before debt recycling?
Drawing investment funds directly from an unsplit home loan redraw creates a mixed-purpose loan under ATO Tax Ruling TR 2000/2, contaminating tax deductibility.