Paying off a mortgage in world record time...
A question submitted recently online:
I am a single, self-employed 45-year-old private business consultant working from my home office. My practice generates $250,000 to $300,000 per year. I am paying off my house and I have a mortgage of $450,000. My aim is to pay this off as soon as possible. To do this I need to withdraw substantial income from my business, resulting in substantial amounts of personal income tax. I do not claim a full-time home office because I am concerned about paying capital gains tax on a proportion of the selling price when I eventually sell. What is the best way to minimise income tax and pay off my loan as quickly as possible? I have been told there would be complexities in borrowing substantial amounts from my company to pay the mortgage.
This question is one that gets asked all the time. It's really simple in principle and yet at the same time extraordinarily complex. More to the point, the ramifications of getting it wrong are far reaching. The devil really is in the detail.
The biggest issue is there is almost noone who can provide sound advice on how to manage income, cashflow, debt reduction, and taxation all together. There are thousands who may have some idea singularly, but that doesn't solve the problem presented by the enquirer.
There can only be ONE primary purpose. Deciding that will decide the order and efficiency of all of the other components, including tax. However having said that there is tremendous scope to reduce debt without adversely affecting cashflow.
One can only hope that this enquirer got better advice in person than what was presented via the column online. If you read this post then give us a call, we can definitely help