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Reduce my tax please!

My husband and I have a house worth $900,000-plus with a mortgage of $350,000 ( i.e. In the form of a line of credit). We have a shared gross income of $200,000, with a son and daughter in years 9 and 12 at private school. We live frugally, and our earnings are basically equaling out our expenditure, and thus we really do not expect to pay off this mortgage until our kids finish school. We have no property or share investments to speak of.

Is there anything we can do to reduce our tax bill?

Posted by Audrey C on 26/02/2014 @ 09:43

Thanks for the question Audrey.

You are well set up with a good home and a very manageable mortgage. You then have the private school fess coming out of after-tax income which is what is damaging your finances. You have little room for savings – what is good is that you say your disposable income matches your expenditure so you are not incurring any further debt.

Your only option is to go into debt in order to start an investment portfolio. You could look to taking a separate loan on your home to secure the funding. There will be income (dividends) which offsets some of the interest, so you won’t save much tax, but if you set it up correctly there is minimal risk. At least this way you have an asset working for you into the future.

You wouldn’t buy individual shares but rather look to a vehicle such as a share trust that matches the All Ordinaries Index.

Posted by Martin Speedie on 27/02/2014 @ 15:44
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