Podcast Archives - The Property Couch

TPC Gold | Property Due Diligence: What to Know Before Buying an Existing Unit

By The Property Couch April 22, 2025 in Podcast

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This snippet is from one of our previous episodes: Is Now The Right Time to Buy a High Rise Apartment?

When it comes to buying an existing apartment or unit, doing the right due diligence can save you from years of costly surprises.

In this TPC Gold snippet, Bryce and Ben break down the must-do checks every buyer should know before purchasing a strata or medium-density property.

From digging into the body corporate minutes to having quiet chats with the neighbours, they share the practical (and often overlooked) steps that separate a smart buyer from a regretful one.

“If you’re buying into a building, you’re buying into a community—and sometimes that community has stories you won’t find in the contract. – Bryce”

Whether you’re a first-home buyer, upgrading, or planning your forever home, this is a must-listen if you’re considering purchasing an existing property.

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Book a free consultation with one of our Buyers Agents today and take the stress out of your next home purchase!

__________________

If You Enjoyed TPC Gold | Property Due Diligence: What to Know Before Buying an Existing Unit, You Might Also Like:

Ep 7 | Studio or One Bedroom Apartment as an Investment Property
Ep 18 | What is a Buyers Agent and Do You Need One?
Ep 311 | The Dummies Guide To Strata Properties & Body Corporates

Transcript

Ben Kingsley
So what’s the DD, what’s the due diligence we need to do, Bryce? What’s the number one thing?

Bryce Holdaway
Number one due diligence is you go and have a look at the past track record of body corporate minutes, because what does that tell you? You’ve got a community of people coming together saying the body corporate’s got a responsibility for X, Y and Z and if there’s something wrong with the building they’re going to let you know, or if there’s something wrong with a defect or a person who’s living there or something that is affecting the peaceful enjoyment of that community, it is usually going to be in those minutes. And I would go back as many as you can possibly get your hands on, minimum two, but it’d be nice to see three, so you can see if there’s anything back in the past where there might have been an issue. Now I’ve got a beware on that Ben, because based on what we’ve been talking about today, would there be an incentive Ben for…

Ben Kingsley
…the body corporate not to disclose, Bryce?

Bryce Holdaway
Correct.

Ben Kingsley
Yes.

Bryce Holdaway
Because what’s one of the biggest challenges that you’re going to have with the current issue around the crisis is people protecting the value of their asset. And how do they protect the value of their asset? They have an off-record chat, Ben, about some issues that they do not put on the minutes because they know this is what the diligent people will do. But first of all, that’s what I would do, Ben. Notwithstanding there’s an issue.

And secondly, I talked about it before, but do you have a body corporate that is proactive about realising that a building will need some maintenance done? And are they going to be reactive or proactive? And reactive means that they will just deal with stuff as it happens versus people who go: Hey here’s our 10-year maintenance plan. Here’s that divided by 10; here’s that divided by the 18, the 16, the 12, the 8 owners. Here’s your contribution each year, so that you make that. Have they got a sinking fund balance for a rainy day?

Ben Kingsley
A healthy sinking fund balance is a good sign of a couple of things, Bryce; a well-built building as well. Because if they haven’t had to do anything with it, and I’ll give you a good example. Where was I? I was in Brisbane, and I was looking for an apartment for a client of ours and I came across this one in about six kilometres out of Brisbane and I went and had a look at it and I thought, okay, it’s really well-priced, good floor plan. I did notice a couple of cracks, so I’m like, okay. So everyone goes, well, can you still get a building and pest inspection on the building? I go, yes, you can. And you can even get them on high rises.

Now, some building and pest inspectors will say there’s a limited scope in terms of the external work they do, especially if it’s 20 or 30 stories, they’re not gonna be able to get up on a scaffold and go and have a look at it. But they can still do the underground car parks, they can still do that, because most stuff comes from the foundation and works up. So in this particular case, I got a building and pest inspection done and I was like, oh, a couple of cracks there I’d like an engineer to have a look at. As soon as he said that, I said, no, no, don’t even worry about it. As soon as you say that I’m out. That’s it, I’m moving on to the next block because you can pay $400, $500, $600 and you get that and all of sudden it’s like, okay, if that’s worse than I thought it was because it’s structural in an area… I don’t even need to engage in an engineer; I’m not gonna buy that for my client. It’s like, next property please. Even though I thought it was a good buy, I’m moving on.

Bryce Holdaway
That’s what we call self-selection, Ben.

Ben Kingsley
I don’t need to spend a few grand to have the engineer tell me what’s wrong with it.

Bryce Holdaway
Yeah, so there you go folks. And the last one is, I apply this particular one, Ben, even if it’s a house, if it’s a townhouse… I go and talk to the neighbours.

Ben Kingsley
Yeah.

Bryce Holdaway
Because they are only too willing to tell you.

Ben Kingsley
Well, it comes back to that story about whether the body corporate is fully disclosing right? So if you are buying into a medium density; again, owner occupiers could be listening to this saying: I do want to live here and that is the price point to get me into that suburb and there are lots of apartments with 30 or 40 apartments in them now, so go and door knock. You know how they’ve still got the security that you can’t get through the front door? Just door stop them. I’ve done it before, my door stop is: Oh excuse me do you live here?

Bryce Holdaway
But what happens if you’re not a Collingwood supporter…?

Ben Kingsley
There’s a nice way of doing it, and here’s the approach. It is as simple as: Oh hi. Because what they do is: Oh do you need to get in? And it’s like: No actually, I’m interested in apartment number 31. But I would love to have a chat with you. Do you own or rent here?

Bryce Holdaway
“Ohhh, you’re buying the one that Jessie’s divorcing in, eh?”

Ben Kingsley
Thank you, tick; nice bit of information. “Oh lovely couple, didn’t know what happened there.” Especially the old folk who have been in the building forever. Some of them ask you up for a cup of tea. “Would you like to come up and have a look at my place as well? Are you a buyers agent? Oh you can probably value it, what is my property worth?” You get the whole thing right. And “are you on the body corp? Oh you’re on the body corp? What’s happening?” Oh it’s just unbelievable. I would stop three or four people to get the information that I need to get to.

Bryce Holdaway
That could cause a crisis Ben because people are wondering if they’re gonna buy this they might get stopped by you for a little chat and they might not buy anymore, so yeah.

542 | The Overlooked CGT Timebomb Hidden in Joint Tenancy – Chat with Julia Hartman

By The Property Couch April 17, 2025 in Podcast, Property Investment

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As tax season looms, we’re bringing back Australia’s #1 property tax expert, Julia Hartman, to help you understand the nuanced world of joint tenancy, debt recycling, and more!

Julia is the Chief Technical Tax Adviser here at Empower Wealth and the founder of BAN TACS, a cooperative of tax professionals that’s been helping Aussies navigate the world of property tax since 1992.

This week’s episode is all about how to avoid accidentally handing thousands over to the taxman.

Here’s what we unpack:

✅ Debt Recycling: Can you legally turn non-deductible debt into deductible debt?

✅ Joint Tenants vs. Tenants in Common: How choosing the wrong ownership structure could trigger a massive Capital Gains Tax bill later!

✅ Victoria’s $50K Land Tax Grab: Who’s caught in the net, and can you avoid it?

✅ Dominant Purpose: Understand this concept, and you could legally save thousands

From legislative shake-ups to understanding the grey areas in tax-deduction strategies, this is a jam-packed episode for property investors and homeowners alike. Tune in now!

Free Stuff

We’re growing — and we’re looking for passionate Buyers Agents to join our team!
At Empower Wealth, you’ll work alongside some of the best in the business — helping everyday Australians secure their dream homes, build wealth through property, and move closer to financial peace. If you — or someone you know — is a dedicated professional who puts people first and is ready to grow with a values-driven team, get in touch at Empower Wealth or via The Property Couch.

Give the Gift of Sight – Just $100 Can Change a Life 👁️
To celebrate Bryce’s 50th birthday, we’re on a mission with the John Fawcett Foundation to restore sight through life-changing cataract surgeries in Indonesia.Thanks to our incredible community, we’ve already raised over $50,000 — and we’re aiming for $60,000 by May 27! As TPC listener, Jeff, shared: “It just felt so real — giving sight to unsighted people. I signed up and donated in 10 minutes.”
Here’s what your donation can do:
👁️ $100 = Restores sight to 1 person
👁️👁️ $200 = 2 people
🖐️ $500 = 5 people
✋✋ $1,000 = 10 people
Give the gift of sight >>

Listen to Julia’s other episodes here >>

Timestamps

0:00 – 542 | The Overlooked CGT Timebomb Hidden in Joint Tenancy – Chat with Julia Hartman
1:15 – In the shadows of tax time…
3:23 – The $20K instant asset write-off
4:08 – Exciting upcoming guests; stay tuned!
6:51 – We’re on the hunt for Buyers Agents!
8:05 – Bryce’s 50th: Give the gift of sight for $100 😮
8:28 – Mindset Minute: “Success is something you attract, not something you pursue”
11:08 – Welcome Julia!
12:10 – Topic #1: Debt Recycling
13:13 – What is debt recycling?
14:59 – Understanding dominant purpose
16:11 – The Harts Case & Part 4A as the Government’s secret weapon
19:51 – The Grey Area: Debt recycling with Principle & Interest vs. Interest Only loans
24:26 – The #3 Definitions of Debt Recycling
28:11 – “You can’t owe yourself money”: How folks lose deductible interest on their deposit
31:22 – Topic 2: Joint Tenants Do NOT Technically Inherit, here’s why!
33:28 – Joint tenants vs. Tenants in common
34:55 – Julia’s ideal plan
36:03 – Is it right? Couples carrying forward their partner’s CGT debt
38:25 – The Catch: Changing from joint tenants to tenants in common
41:36 – THIS is why Tax planning is essential…
42:26 – Nuanced Examples: The 6-Year Rule, can stepchildren challenge the rule and more!
46:59 – Topic 3: Victorian Land Tax Grab – The $50K Trap
51:00– The ATO tripwire & data matching
53:04 – What triggers this tax?
56:30 – Is it possible to avoid this? CGT, Small business concessions & moving your home businesses

And…

59:04 – What a fantastic fireside chat with Julia!
1:00:55 – Life by design hack: Don’t ask you child what they want to be when they grow up. Ask these 5 Qs instead!
1:03:26 – WMPN: What do US’ tariffs mean for Australia’s economy?

TPC Gold | Why We Swear by the Seven-Day Float

By The Property Couch April 15, 2025 in Podcast

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This snippet is from one of our previous episodes: Seven Tips to Trap Your Surplus Cash.

In today’s TPC Gold soundbite, Bryce and Ben unpack one of the most powerful—and underrated—tools in the MoneySMARTS money management system: the seven-day float.

Forget spreadsheets, complex budgeting, or tracking every dollar you spend.

The seven-day float is all about simplicity and control. It’s a weekly spending system that helps you stay on top of your cash, ditch the guilt, and spend with purpose.

As Bryce puts it:
“It’s a game changer. It might feel hard for the first couple of weeks, but once you find your rhythm, it can completely change your money habits.”

What is the Seven-Day Float?

It’s your weekly spending allowance—the money you’ve already set aside (based on your plan) to spend on things like food, petrol, and everyday expenses. You’re not budgeting in the traditional sense—you’re following a clear, rules-based system that helps you avoid tapping into savings or overspending.

And the best part? It works whether you’re a uni student, a parent managing a household, or the CEO of a big company.

Why It Works

✔️ It replaces guesswork with clarity
✔️ It breaks the “tap-and-go” overspending habit
✔️ It gives every dollar a job
✔️ It builds financial confidence and discipline

“The seven-day float makes you pause. It helps you ask: Do I really need this right now? Can it wait till next week? That’s the magic.” – Ben

The banks don’t love this approach… because it’s not built to get you to spend more. It’s built to help you trap surplus, build wealth, and live with less stress.

Want to Know How to Start with the Seven-Day Float?

Learn all about MoneySMARTS—including how the seven-day float fits into the broader plan—in our book, Make Money Simple Again.

It’s helped thousands of Australians take control of their money without giving up the things they love.

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If You Enjoyed TPC Gold | Why We Swear by the Seven-Day Float, You Might Also Like:

Transcript

Bryce Holdaway
So number three is get money smart. That’s a surprise from us.

Ben Kingsley
Yeah, well we’ve got to weave it in, don’t we? But the point here is…

Bryce Holdaway
…we believe in it.

Ben Kingsley
It’s a proven system, Bryce. So the reason why we believe in it is because a lot of people don’t like to have complex ways in which they’ve got to document every dollar they spend. So our top-down approach in terms of how we make money management easier is what it’s all about. And in terms of these top seven tips, the one we want to highlight the most is the seven-day float right, so the weekly allowance.

Bryce Holdaway
It’s a game changer.

Ben Kingsley
It’s a game changer because you take that mindset that we were talking about before about how much money have I got, so irrespective of whether it’s a cashless economy or you don’t care that it’s a tap and go then, because you will absolutely know that I have got $50 left so this is a decent purchasing decision. Whereas if you know that there’s $60,000 in your offset account…

Bryce Holdaway
Absolutely.

Ben Kingsley
So boom, boom, you’ll just keep doing it, right? So we’ve gotta change that habit. It’s like, no, no, I’ve gotta get to my next seven-day allowance, you know, that weekly flow.

Bryce Holdaway
So I’ve been doing the seven-day float for years now. Thanks to you and Popey introducing that. I can say to the people, and I don’t know if you can remember far back when you started it, I say to the people, when you implement it, you will probably stumble. Keep going. Because it’s usually week two, you’ve made less, week three, maybe even week four, Ben, but you’ll eventually get into the cadence, you’ll eventually get into that rhythm, and it’s really, really important. Because if you’re trying to undo a lot of habits of keeping up with the Joneses, tapping and going, not being accountable with your money, keep going back to the well. It’s actually a huge shift for you to go: Ooh, what do you mean I’ve got to reign in my spending? What do you mean I’ve got to actually identify how much is in my seven-day flow? What do you mean I’ve got to actually use Grade Five Maths just to keep up to date on how much money I’ve got left? It is an adjustment, it is a shift, but it’s one of those things if we go back (to) if you do what’s easy, your life will be hard. It’s actually gonna be hard in the very first couple of weeks as you’re trying to get two people on the same page if you’re sharing agenda with someone else, but once you’ve done it, it makes an enormous difference.

Ben Kingsley
It does. I mean we’re seeing some of these money apps from the banks and so forth. I mean they want you turning money over, right? It’s in their best interest, commerce, the whole thing works for them, right? So if their app tells you, I can’t go and buy a dress now because it’s not payday, but if you’ve just been paid, you can go out and buy a dress or you can go out and buy something material, that’s probably not still the best money management system. What you should have is a classification for clothing and footwear, and you should provision for that, and you should know basically how much you’re going to spend on that over the year. Whether you go and buy that dress tomorrow, that’s fine. Just don’t go and buy three or four more dresses or five pair of shoes or in the guy’s case, don’t go and overspend on business shirts or whatever it is you’re going to spend on. That’s the point in terms of once you’ve provisioned for it, you’re able to spend it, but just don’t spend any more than that. So there’s a combination of ideas that meshes together to build the money management system in terms of MoneySMARTS. That’s the way in which to use that.

Bryce Holdaway
So couple of things for MoneySMARTS… It’s not a budget; it’s a money management system.

Ben Kingsley
Correct.

Bryce Holdaway
It’s the money that you said you’d spend each week; we call it the seven-day float, and it just means that you don’t unconsciously overspend again, Ben. And the rest is just a simple rules-based system thereafter. So the fundamental principle behind it is that every dollar has a job to do, every dollar is allocated somewhere, and it’s just based on how our grandparents used to use money BC (before credit cards), and it’s evergreen, Ben. It works at every stage of your life.

Ben Kingsley
Every stage.

Bryce Holdaway
If you’re a university student on casual income, no problem. If you are CEO of a Fortune 500 company, it works. It doesn’t discriminate; works for everyone. So if you wanna check that out, clearly we’ve written a book on it, but it’s something that we think is imperative to trapping surplus cash.

541 | How to Align Your Financial Plan with Your Partner

By The Property Couch April 10, 2025 in Podcast, Property Investment, Q&A

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These are the questions you’re thinking… but haven’t asked yet.

This week’s Q&A Day is a goldmine for anyone navigating the trickier parts of property investing — especially when it’s not just about the numbers, but the people involved.

🏠 Jason’s got a long-term strategy (and a property plan to back it), but his partner’s worried about short-term costs. How do you bridge that gap when you’re not on the same page financially?

💬 Monty (aka Ross) wants to know — should you release equity from your investment property or your home… and what does that mean if you’re planning to upgrade your principal place of residence in the next few years?

💸 Tom asks us a fantastic question that we think will clear up a common misunderstanding about offset accounts and P&I loans.

From communicating better with your partner to understanding the real mechanics behind your loan structure — we’re covering it all. If you’ve ever thought, “Surely, I’m not the only one confused by this,” then this episode is for you! Listen now.

Free Stuff

Pre-Order Now! How to Retire on $3,000 a Week
Folks, our book is OFFICIALLY open for pre-order! We also charted #1 for pre-ordered bestselling book – Thank you to all those folks excited for our latest book, we can’t wait for you to read it! 😊
You can preorder the book from these retailers:
The official RRP is $32.99 — so whichever one you choose, you’re getting a great deal 😊 To get more updates, behind-the-scenes content and VIP bonuses, join the waitlist now.

Looking for a home? Our new service DEDICATED to owner-occupiers
Due to the high level of client requests, we’ve now got a Buyers Agent dedicated to helping you buy your first, forever or next home! Reach out today by requesting a free initial consultation and select: “Finding A Home” from the drop-down menu. Get in touch today!

Moorr Mobile Update: Historical Tracking now LIVE!
Ever wished you could look back in time and see how your net worth has changed over the years? Or compare your financial position across any two points in time? Now you can! It’s like a fitness tracker… but for your money muscles. Login or create your account to use it today!

Have you faced the same challenge as Jason — or do you still have questions after this episode? We’d love to hear from you!
If you’ve found a way to bridge the gap with your partner around financial planning or property investing, share what worked for you! Your story could really help others in the community.Or if you’re still feeling unsure about something we covered — whether it’s equity release, offset accounts, or anything else — let us know what’s unclear. Your question might be the one someone else is too afraid to ask. Head to our SpeakPipe and record your message today!

Give the gift of sight for just $100!
To celebrate his 50th birthday, Bryce is partnering with the John Fawcett Foundation to restore sight to those who need it most. Together, we’ve already made a huge impact with more than $50,000 raised — but we’re not done yet. We’re aiming to hit $60,000 by 27 May! As Jeff, a TPC listener put it best: “It just felt so real — giving sight to unsighted people. I signed up and donated in 10 minutes.” Every dollar goes directly to sight-restoring surgeries. Here’s what your money can restore!
- 👁️ $100 = Sight for 1 person
- 👁️👁️ $200 = Sight for 2 people
- 🖐️ $500 = Sight for 5 people
- ✋✋ $1,000 = Sight for 10 people
Help us to give sight back to those in need. Donate today >>

Questions We Answer

Q1) Bridging the Gap on Property Investment with My Partner from Jason

“My partner and I have different perspectives on property investment. While I’m following our Empower Wealth property plan that considers our long-term strategy with our lifestyle by design, she’s concerned about the initial negative gearing and short-term costs. This recently came up when we purchased an investment property.

Her background as a Chartered Accountant makes her very detail-oriented, and the initial financial outlay understandably worries her. I believe there’s a way to bridge this gap by clearly communicating our overall financial goals and the long-term benefits of property investment.

However, getting her engaged in these conversations is proving difficult. She is the plumber who doesn’t like doing their own plumbing.

What I’d like to know:

How can I effectively communicate the long-term benefits of property investment to address her short-term concerns?

What strategies can I use to encourage her to participate in financial planning conversations?”

Q2) Investment Properties vs. Principal Place of Residence from Ross

G’day guys, it’s Monty here.

Thanks for the amazing work and the great content you produce each and every week on the podcast. My wife and I are very fortunate to have 3 properties. We have our principal place of residence in Sydney with roughly $300,000 owing on that.

We have an investment property up in Brisbane, which we’ve had for roughly 10 years, and our second investment property is in Perth, which we’ve had for 3 years. All three properties are in separate loans, and they’re not linked at all.

Obviously, the last couple of years we’ve seen significant growth across all three properties, and we’re looking at purchasing our 3rd investment property sometime this year. The question I had was, is it beneficial to release equity from either of the investment properties, or is it better to release more equity from our principal place of residence?

Over the next 5 years or so we’re looking at upgrading our principal place of residence, and I wondered that if we released equity from our Sydney home, would that have implications down the track when we actually sell that Sydney home to upgrade our principal place of residence?

Being teachers, my wife and I, we’re always interested to learn as much as we can, and that’s where you guys have been amazing over the last 10 years or so. It would be great for any information you could provide.

Obviously, we want to do the best for our 3 kids, and hopefully we can help them out in the future. So any information you have on this topic would be greatly appreciated. Thanks again for the great work you do and up the mighty Swannys in 2025.

Thanks guys.

Q3) Principal & Interest (P&I) vs Interest Only (IO) Offset Cashflow Feedback from Tom

Hi Team,

I’ve been debating whether to bother you with this or not as it may be a very rudimentary misunderstanding of mine, but after Thursday’s episode nearly addressed it and after doing some consulting with Opti to see if you had in a different ep, I wonder if I’m not alone in a knowledge gap I had before working with Joel.

I’ve only ever had IO loans and as a result know very little about the mechanics of P&I loans (as I imagine many first home buyers or maybe other investor only, non owner oc’s like me may have too).

During the planning with Joel I learned that an offset against a P&I loan doesn’t change the monthly repayment amount, just the proportion of P&I paid each month. i.e. improves the debt position but not monthly cashflow.

Admittedly, I have not cut a full lap, I’ve not listened to 273 through to 494, so excuse me if it’s mentioned in these eps. Asking Opti, it pointed me to ep 448 where you skirt around it but not explicitly mention it.

So to summarise, before being corrected by Joel, even after listening to nearly 300 eps, my previous naive understanding was that offsetting any debt improved cashflow AS WELL as lowered interest paid, So, I had grand plans where I could park company money into a home offset from time to time to improve cashflow, which I realise now is silly but again if i’m thinking it then maybe others might be too.

For clarity, I am not explicitly looking for an improved cashflow position (paying a future home loan off earlier is fine by me) I was just so accustomed to the cashflow benefit of offsets on IO loans, and never really bridged the gap of how P&I worked in practice, I felt adequately foolish after we finished the meeting that day but at the same time validated the choice to pay for the big guns.

I’ll leave you to do with this as you wish.

Thanks again for all you do.

Tom

Timestamps

0:00 – How to Align Your Financial Plan with Your Partner
1:47 – How to Retire on $3K a Week: Pre-orders now OPEN!
3:13 – Our service dedicated to owner-occupiers?!
4:37 – Moorr Mobile Update: Historical tracking now LIVE! 🎉
5:29 – Bryce’s 50th: Give the gift of sight for just $100!
7:46 – Mindset Minute: “Listen to the people closest to your goals!”
8:22 – Q1) Bridging the Gap on Property Investment with My Partner from Jason
10:20 – But… the properties are making a net loss?
14:34 – “A human convinced against their will, remains unconvinced still…”
15:41 – Solution #1: Low-pressure conversations
16:55 – Solution #2: Let them choose their lane
17:43 – Solution #3: Neutral third-party
19:24 – Solution #4: The opportunity cost
20:00 – Why you need to understand the rate of return calculation
22:35 – The dilemma of residential property investing
26:14 – Why you want 9% gross property return
28:31 – Experienced the same problem? Send us a SpeakPipe of your solutions!
29:35 – Q2) Investment Properties vs. Principal Place of Residence from Ross
31:43 – Let’s take a moment to honour their achievement!
32:49 – What is the goal? Do you need a third investment property?
37:35 – Ben puts on his “investment-savvy mortgage broker” hat
41:56 – Summary
43:19 – Q3) P&I vs IO Offset Cashflow Feedback from Tom
47:08 – EXPLAINED: Amortising loans
49:39 – Solutions to recalibrate your loans later
52:15 – What if you have a substantial amount in your offset?

And…

54:15 – Life by Design hack: Cost-effective camp hack
56:40 – WMPN: What do Trump’s tariffs mean for Australia, rate cuts and property?

TPC Gold | Can You Use Your IP’s Equity to Pay Off Your Home Loan Early?

By The Property Couch April 8, 2025 in Podcast

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This snippet is from one of our previous episodes: Q&A – How to Avoid Poor Loan Structure

It’s a question we get all the time from property investors: “Can I use the equity in my investment property to pay off my home loan faster?”

In today’s TPC Gold soundbite, Bryce and Ben unpack this exact scenario—and explain why it’s not as straightforward as it seems.

Spoiler alert: It all comes down to how the ATO views the purpose of your loan.

In this short but powerful episode, you’ll learn:
💸 What the ATO considers a private (non-deductible) purpose—and how that affects your tax deductions
⚠️ How redraws and lines of credit can accidentally “pollute” your loan structure
✅ Why having separate splits and clean offsets is crucial for clarity and compliance

Want to Avoid Costly Mistakes in Your Property Finance Strategy?

If you’re thinking about refinancing, using equity, or paying off your mortgage sooner, make sure the structure is right from the beginning.

Book a free initial appointment with an investment-savvy mortgage broker from our sister company, Empower Wealth.

Need Personalised Tax Advice?

Tax deductibility depends on your personal circumstances and how funds are used. For advice specific to your situation, book an appointment with a qualified tax accountant from our sister company, Empower Wealth.

Remember: No mortgage broker should be giving tax advice. Always speak to a registered tax professional to get it right.

__________________

If You Enjoyed TPC Gold | Can You Use Your IP’s Equity to Pay Off Your Home Loan Early? You Might Also Like:

Transcript

Bryce Holdaway
We’ll go on to another sort of related question as we get all these segues. This is from Dean. “Hi guys, my question is can you use equity in your investment property to wipe out your principal place of residence mortgage? Cheers, Dean.” I’ll have a go at that.

Ben Kingsley
Yeah.

Bryce Holdaway
I’ll have a go at the answer, and you’re the mortgage broker, so you come and tidy up the edges…but the answer is you can do it. This is a common question. So people say: If I secure against an investment property and then pay off a non-tax deductible debt like a principal place of residence, can I do it? The answer is you can do it, Ben. But the tax department looks under and they go: What was the purpose of the loan? And if you secure against your investment properties to use a loan to pay off a private non-tax deductible debt, the tax office just goes “I see what’s going on under here. The purpose of the loan wasn’t for investment. It was actually for a private purpose, therefore we will not allow the interest to be deductible.” So to answer the question, you can do it, but it’s not gonna give you any benefit.

Ben Kingsley
No, effectively you’re going to have the same debt and it’s still going to be in the same position where it is effectively non-deductible debt. The other classic one that people do here, Bryce, is they release equity from their investment properties or their family home or whatever it may be, and then turn that into an investment property and then say: oh, no, no, no, that property’s an investment property now and I release the equity out of that to put a deposit down for my new upsized family home. Surely I can claim that because it’s against that investment property. No, purpose of funds test – in terms of what it does, that money is still non-deductible. So be very careful. People just think that they can pay loans down and then release the money against all that, and that’s going to be deductible? Not true.

Bryce Holdaway
Love it. Ben, beware of pollution. So this is often something that people don’t think about. So for example, let’s say you do everything by the book. You set up a loan, it’s for investment purposes only. You’ve got a redraw facility Ben, and what happens is you think: well, with that redraw facility, I’m going to put all of my income into the redraw facility, and for five days, I’m going to have all the interest benefits of that. And then on a Thursday, I’m going to pull my cash out and pay for the groceries.

Problem: The pulling out of the money just changed the purpose of the loan. You have just fully polluted that loan. So it was initially set up with an intent for investment, and the fact that you parked some money there and pulled it out for groceries at the end of the week; you have just polluted the loan. You’ve just made that loan very complicated, which is why an offset facility is cleaner and avoids the pollution over a redraw facility.

Ben Kingsley
And while we’re at it, Bryce, and we’ve talked about this before, the other great pollution killer, or basically the interest deductible killer, is lines of credit. I get $100,000 line of credit, I use $80,000 for investment purposes, and $20,000 to buy a car.

Bryce Holdaway
Ooh I like this one.

Ben Kingsley
I then start paying off that car thinking that I’m paying off that portion that I took out for the car. Tax office doesn’t see it that way at all. The first $20,000 that you put in there is actually paying off the $80,000 investment debt. So this is another example of where an investment-savvy mortgage broker will separate out potentially a small amount for personal use and separate that in a different loan split for investment use. You can have multiple splits. It obviously requires a little bit more understanding and management, but ultimately it’s as simple as using your MoneySMARTS. Everything goes into that primary cap.

Doesn’t matter if you’ve got a hundred loans under that; if one of those loans is for personal use, you’ve obviously got to pay that off. But it’ll be drawing that money from the primary account, exactly like all of the rental income you’ve got coming from all your properties will be going into that primary account. So there’s one central transactional account in which all of that money is going to be serviced from.

Bryce Holdaway
Don’t pollute, Ben.

Ben Kingsley
Don’t pollute, Bryce. At the end of the day, no mortgage broker should be giving tax advice. And here, we’re not giving advice, we’re just sort of saying these are the pitfalls. These are the challenges around that, so no one should be sitting here saying I heard this and I’m going to action this without actually seeking independent advice from a tax accountant.

Bryce Holdaway
Foundational underneath that discussion Ben was cross security versus standalone, so the good thing is we were talking then about standalone options.

Ben Kingsley
Yes.

Bryce Holdaway
But making sure you don’t get the wrong standalone option, particularly for pollution. So great question Dean, thank you for that. Let me quickly get another one for us Ben.

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