The following case study relates to a real life example of how we helped
Elaine and Craig achieve the following results in 3 years

$39,336

In tax savings and extra home loan repayments

$302,001+

Capital growth on retained property

$327,745+

In total home loan repayments and equity to repay debt

Whilst this is an actual example, all personal details have been changed, for confidentiality purposes.

Our clients

Elaine and Craig have been utilising our tax return service for two years. Elaine is a medical professional and Craig an IT director. They have 3 children and earn a household income just over $350,000.

Whilst collecting their tax documents 3 years ago, they told us that they had purchased a new main residence in the Eastern Suburbs of Sydney. They were in the process of selling their old home so that they can reduce their debt and wanted advice on whether they were making the smartest decision.

The problems before we got involved

  • Elaine and Craig had a significant new home loan, and based on their household income and family expenses would take them a considerable time to repay
  • If they sold their old home and used the net proceeds to repay their new home loan, they would still have a considerable new home loan, which would make a negligible difference to their monthly home loan repayments
  • After paying their new home loan repayments and family lifestyle expenses, they were left with very little surplus cash flow that could be used to invest and secure their family’s financial future
  • Until they sold their old home, they were repaying approximately $11,000 in principal repayments on their old home loan. As a result, they were reducing their tax benefits and principal reduction of their new non tax-deductible home loan

How Tax Effective helped Elaine and Craig

  • After running the numbers, we found that if their loans were restructured tax effectively, we could reduce the holding costs of their old property to $7,000 per annum, whilst increasing their after-tax cash flow by an additional $11,000
  • We recommended that they take their old property off the market and defer the sale until their property increased in value, to a point where they can sell it and repay their new home loan in full sometime in the future
  • We tax effectively restructured their home and investment loans and negotiated a 1.2% interest rate discount from a major bank which reduced their interest repayments and increased their after-tax cash flow

The results so far

Since adopting our recommendations under 3 years ago, Elaine and Craig have achieved the following results:

  • Together with the growth achieved on their old main residence and additional principal repayments, they are $327,725 closer to repaying their new home loan
  • As a result of deferring the sale of their old main residence, the property has achieved $302,000 in compound growth
  • Elaine and Craig have achieved a total of $39,336 in additional tax refunds and home loan principal repayments
  • Elaine and Craig now have the flexibility to use the equity in their old property to purchase additional investments, fast track the repayment of their new home loan or a combination of the two

Post becoming a clients

After seeing Elaine and Craig again during tax time we discovered that their combined super balances had increased and we recommended that they establish a self-managed super fund with a limited recourse borrowing arrangement.

The fund was established and used to purchase an investment property.

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