When you keep cash in a standard high-interest savings account, the interest earned counts toward your taxable income and gets chipped away by your marginal tax rate.
Money kept in an active mortgage offset account reduces the principal balance upon which your home loan interest is calculated. Because mortgage interest is paid with post-tax dollars, the savings you receive are effectively 100% tax-free. Enter your numbers below and click calculate to evaluate your true effective return.
Enter Your Mortgage Details
Tax-Adjusted Equivalent Return
How is the pre-tax return calculated?
Because investment earnings are taxed at your marginal rate, a standard investment must generate a higher return to match the risk-free, tax-free savings of an offset account. The formula used is: Interest Rate / (1 - Tax Rate).
When you keep cash in a standard high-interest savings account, the interest earned counts toward your taxable income and gets chipped away by your marginal tax rate.
Money kept in an active mortgage offset account reduces the principal balance upon which your home loan interest is calculated. Because mortgage interest is paid with post-tax dollars, the savings you receive are effectively 100% tax-free. Enter your numbers below and click calculate to evaluate your true effective return.