TRANSCRIPT

If I could show you a way to pay off your mortgage faster and legally minimise your tax, would you be interested?

In this video, I’m breaking down how debt recycling can help you do both. And no — it’s not some complicated tax trick. It’s simply a smarter way of structuring your finances.

The basic idea is this: pay down your non-deductible debts first and make sure that all your loans are legally tax deductible.

Hi, I’m Nick Tolevsky from Tolevsky Partners. We help doctors and medical professionals legally reduce their tax, build smarter practices, and create lasting wealth.

Now, picture this for a moment. You’re a doctor running a busy private practice. The waiting room’s full. Your team is flat out. Business is humming along nicely. But at the same time… your home loan is hanging over your head. Maybe some personal debt too. And you’re paying massive amounts of interest. You’re earning good money, yet it feels like you’re constantly juggling — paying one debt while another creeps up. Sound familiar?

Running a medical practice costs a lot of money. Fit-outs. Equipment. Furniture. Staff wages. The list goes on. Most practice owners fund this using a mix of cash, credit cards, business loans, hire purchases… or even buy-now-pay-later options.

And here’s the important thing: the ATO doesn’t tell you how to fund your business. That decision is completely up to you. Which means using borrowed funds for your practice is perfectly legitimate… and often, it’s smart.

Why? Because it allows you to save your practice income for other things — like paying down non-deductible personal debt faster.

So, how could you use debt recycling to save money?

First, you need to understand the difference between good debt and bad debt. Good debt is borrowing that helps you earn income — like loans for your practice or investments. The interest on that debt? Usually tax deductible. Bad debt doesn’t generate income — like a home loan or a personal credit card. The interest there? Not deductible.

Here’s where it really hits: it’s common to see a doctor — or other medical professional — who has a large, non-deductible debt, usually a home loan. And here’s the kicker: if the interest is 6% and the doctor’s tax rate is 47%, they essentially have to earn almost double to cover that interest. In real terms, that makes the loan cost closer to 12%. That’s why we always recommend tackling non-deductible debt first.

A smart strategy is to use your practice’s cash flow to tackle debt efficiently. By managing your practice finances the right way, you can pay off that expensive debt faster and save thousands of dollars in the long run.

The key is purpose. While a tax deduction is nice, it cannot be the main reason for doing it. There must be a real commercial purpose.

So, how much tax could you potentially save?

Let’s say you were able to recycle your existing mortgage debt of $1,000,000. At 6% interest, that’s $60,000 a year you’re paying in interest. If your tax rate is 47%, you could literally save $28,200 in tax each year just by claiming that interest as a legal tax deduction.

Now imagine over 10 years… that’s $282,000 saved, plus the interest on top of that, and the fact that you could use this money to pay down your debts.

Now, debt recycling doesn’t mean you have to enter into any fancy schemes. All it means is restructuring the way you manage your practice income and expenses.

But let me caution you… debt recycling can be powerful, but it’s not a DIY strategy. There are rules about what’s deductible — and what’s not. You don’t want to cross the ATO.

The key is purpose. Your borrowings must exist for genuine business reasons — not just to save tax. Get that right, and you’re in the clear.

Remember, debt recycling isn’t about clever loopholes. It’s about understanding your money and using it effectively.

When done properly, you can keep your practice running smoothly, pay off personal debt faster, and free yourself up financially for the future.

Think of it as giving every dollar a second job — one that moves you closer to financial independence.

If you’d like to see whether debt recycling could work for your medical practice, I can help you design a structure tailored to your situation. Smart. Compliant. And working for you — now and in the long term.

Get in touch today by visiting our website and booking a complimentary consultation. Let’s make your money work a little harder for you.

Until next time…

Nick Tolevsky