Debt Recycling to invest into Bitcoin

Hi All,

I'm a Male, 31, currently jointly own a PPOR with my partner worth $1.5m with loan of $1.1m (P&I).

We have around $20k in our offset account.

I’m looking to commence debt recycling to start to leverage some of my equity into bitcoin or shares.

From my understanding I need to request an ‘investment loan’ from my lender and then use the funds from that loan to make the investment. I can then claim the interest on the investment loan as a tax deduction.

Is it as simple as that?

Cheers

Nicola

 

Nope!

Your understanding is wrong. No 'investment loan' is needed to claim interest, all you have to do is borrow to acquire income producing assets - does bitcoin pay income?

You had better get tax advice.

 

Is this a joke? Are you serious?

 

Good way to blow equity......

 

Hi Terry,

Thanks for the response. What if I am to use it for other crypto assets that generate more crypto through mining?

 

I don't know what that means. It would need to produce assessable income for the interest to be deductible, capital gains are not enough

 

Re crypto, and deductibility of borrowed funds, will this come down to a question of whether you are akin to a share trader (income account) or investor (capital account)???

 

20k in an offset of a $1Mplus loan?

And you want to put it on red/Bitcoin?

Hey, I genuinely love crypto but it should only be part of ...er....how should I out this.... "discretionary spending".

Renting money to buy crypto requires herculean bravado and clear predictions of the unpredictable.

 

Bit coin is investing?

I like dog #5 race #5 at Wentworth Park.

 

Watch talkin' about Willis...I like Dog#7 and Dog#1 race #5.....at Wentworth Park....

 

Thanks Harry. It would be a buy and hold strategy so I don't think I would be able to meet the criteria unfortunately.

 

It can be if you keep it as a small part of a balanced portfolio, buy it with cash and plan on keeping it for a long time.

 

I am guessing you usually invest at the regional tracks like Orange? Those fancy dual dish licker bets might work out there. Inner city like Wentworth much better off with a quality single dish licker imho. But thanks for the tip

 

Nah...none of regional dish lickers....only city slicks....for moi.

 

Fixed it for you.

 

my neck hurts from the shaking of my head

 

Bitcoin is not an investment, it's not even a currency.
Currently the best description imo seems a hi-tech ponzi scheme.

Buying an Antminer to produce some type of income mining BTC may be tax deductable.

 

Perhaps not bitcoin, but there are staking cryptos that pay a regular income (that needs to be reported to the ATO). These coins could be debt recyclable? An example is Cardano

 

You can still debt recycle where there is no income, such as with bitcoin, but the interest would not be deductible but it could be used to reduce CGT

 

Cardano isnt a cryto - Its a blockchain platform that supports the ADA currency. Staking rewards are considered ordinary income (not CGT) and may assist a deduction for interest incurred to hold a crypto holding. Many also mistakenly think that staking reward coin is at a $0 CGT costbase but that isnt correct. The value of the income element will be its costbase. Coinly assists tracking such matters. Any resulting CGT outcome from owning the crypto (ie ADA) used to produce ordinary income should be a CGT asset.