Hello Brains trust,
Our plan is to begin debt recycling our PPOR by redrawing to purchase dividend paying ETFs.
is it as simple as just redrawing, transferring straight to the brokerage account and purchasing the shares.
example:
$500k home loan
make a $50k cash payment to PPOR
Redraw $50k
transfer $50k and purchase income producing shares
is this the correct method for achieving debt recycling, or will I encounter issues somewhere.
thanks
steve
Hello there @Shornick,
Yes, that's pretty must the way it's done.
When you redraw money off the loan and use it to buy EFTS you are using the money to gain assessable income.
When you do that any interest on that loan becomes deductible. Only the amount used to produce assessable income is deductible though. Not the whole home loan.
When we look at if you're doing the right thing, we look at what the re-draw is used for. It will be important to keep good records.
I have found some webpages you might like to look at:
ATO is here to help first-time share and EFT investors
There are also some other community posts about debt recycling here:
Hello there @Shornick,
Yes, that's pretty must the way it's done.
When you redraw money off the loan and use it to buy EFTS you are using the money to gain assessable income.
When you do that any interest on that loan becomes deductible. Only the amount used to produce assessable income is deductible though. Not the whole home loan.
When we look at if you're doing the right thing, we look at what the re-draw is used for. It will be important to keep good records.
I have found some webpages you might like to look at:
ATO is here to help first-time share and EFT investors
There are also some other community posts about debt recycling here:
Debt recycling and refinancing
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