The Positive Gearing Plan .How to get rid of your non- tax deductable housing loan and be free of debt
Session 29 See also 29A
This is part of a number of sessions of Finance for Pensioners and solutions to the Housing and Rental Crisis
A housing loan for a residence is not tax deductable
Investing in your residence is not a good investment
You are investing in a roof over your head but you could have that if you were renting, in which case in general the rent would be less than the interest on your mortgage.
You do not have to pay capital gain tax on the capital growth of your residence but that is no good to you because if you sell you have to buy another property that has had the same capital growth as yours. So it does not get you anywhere other than having a secure roof over your head which of course is the Great Australian Dream of owning your own house.
But dreams are not always true.
The only way of making you financially secure is borrowing money for an investment that has a return in excess of your borrowing costs.
You first priority should not be to get rid of debt but to get rid of bad debt.
Debt on your residence is bad
Debt on an investment is good
as long as the return of the investment is higher or equal to the interest you pay
The first priority should be to get rid of your non tax deductible housing loan
The only way to do that is to change bad debt into good debt
The solution is simple
You increase your debt with good debt and buy investments which make a profit in excess or equal to your borrowing costs. You use the return of your investment to reduce your bad debt housing loan and borrow it straight back to invest into your investment.
You have reduced part of your none tax deductable loan by a tax deductable loan
You are still only paying the same loan repayments that you were paying previously.
THIS STRATEGY WILL STILL WORK IF YOU INVEST IN 100% GUARANTEED GOVERNMENT BONDS
We have included a spread sheet (29A) showing that if you increase your $100,000 housing loan by the same amount of $100,000 for investment in Bank Shares. not only will your housing loan be fully repaid in 10 years but you can pay out your investment loan by selling your investments and make a $13,000 profit.
Let us show you the POSITIVE GEARING PLAN that achieves this
You had an option at age 21.
Invest in a residence by taking out a mortgage loan with the house as security or
Invest in bank shares and use the shares as security for a loan.
Your mortgage payments are the same
At age 81 , 60 years later, you would have a nice a roof over your head with a comfortable pension
Or $128 Million in the Bank !
This will get you a very nice rental property along the way ,a possibility of early retirement, or an extravagant living style.
Of course along the way you may be uncomfortable living in some luxurious rental mansion instead of that comfortable feeling of owning your own home.
Everybody’s situation is different . If anybody is interested give
me a call on 0412 324 806