Ever wondered if you should borrow back the money you've already paid off your home loan? Ben McEachen admits he's never heard of debt recycling, so accountant Pete Burrows breaks it down: what it is, who it suits, and why the investment matters more than the tax deduction. They weigh up rental property against shares, keeping a separate loan and knowing your money temperature, plus the stewardship question most people skip. You'll learn when debt recycling makes sense, when to leave it alone, and the simple test to apply first.

Key Takeaways:

• What It Actually Is: Debt recycling means reborrowing money you've already paid off your home loan and putting it into investments that produce income, such as shares or property.
• Investing, Not Renovating: Reborrowing to renovate or buy things just lifts your loan balance, while an investment can produce income that helps cover the interest.
• Return Before Deduction: Interest on money borrowed to invest is generally tax deductible, but the investment itself still has to be sound because it is what pays the loan back.
• Keep It Separate: A clearly separate loan keeps investment borrowing clean and avoids a messy mix of personal and investment debt.
• Know Your Money Temperature: Your age, time frame and comfort with risk all matter, and wanting your home loan fully paid off is a perfectly reasonable choice.
• Stewardship Over Tax Breaks: Pete argues that chasing a tax deduction shifts part of the load to fellow taxpayers, so check your motivation before you borrow.

Notable Quotes:

1. “Debt recycling, consider it, but don't do it unless you could explain it to your spouse or your friends.” — Pete Burrows
2. “I'm basically just saying I want to pay less tax to help me fund something that's gonna benefit solely me.” — Pete Burrows
3. “We talk about the provision that God has given to us and how we well use that.” — Ben McEachen
4. “You borrowed this to buy that. If that's no good, well then what's paying off the loan?” — Pete Burrows
5. “Consider your motivation behind your money, not just what's going on in your bank account and your spreadsheets” — Ben McEachen

Got a question, comment or personal story to share? Send it through at hopepodcasts.com.au. Ben and Pete will get stuck into it on a future episode.

Pete Burrows is an accountant for small business and individuals with Lower Russell and Farr in Penrith, Western Sydney, Australia.

Ben McEachen hosts Hope Mornings on Hope 103.2FM in Sydney, Australia.

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