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Salary sacrificing your mortgage

accountadmin
April 8, 2017

Overlooked by many individuals, an effective strategy to pay down your mortgage faster is to salary sacrifice your repayments.

By salary sacrificing your mortgage repayments, you are effectively paying your mortgage from pre-tax dollars.

The advantages to salary sacrificing your mortgage are plentiful and include:

-Saving on tax
-Ability to pay down your mortgage faster using pre-tax dollars (as you can contribute more and have the same money left in your pocket)
-Save on interest (as the mortgage is being paid down faster)

Should you not own a house, a similar benefit may be achieved by salary sacrificing your home rent.

Investment properties are generally not a wise idea to salary sacrifice due to the interest being of a tax deductible nature and the fact your employer will have to pay FBT of some sort (you will actually come out behind).

Other items which may be tax deductible are as follows:

-Cars
-Shares
-School fees
-Child care etal

Some items which are used specifically for work will not require FBT paid by your employer ie:

-Tools of trade
-Briefcase
-Protective clothing
-Software (work related)
-Electronic devices used entirely for work related purposes

Issues which you may want to consider before salary sacrificing are as follows:

-Less super (as your base income will be lower)
-Employers refusing to salary sacrifice
-FBT (if applicable)
-Administration charges

Should you require any clarification on any of the above, please feel free to visit your local accounting firm Melbourne.

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