Based on a real client engagement. Names, figures and some details have been changed to protect our clients’ privacy. Projections are estimates based on stated assumptions and are not guaranteed. Every situation is different.
Two medical professionals, $810,000 of debt, an investment apartment that had gone nowhere in twelve years and a $318,000 inheritance on the way. We modelled three strategies over ten years, then measured what the advice was worth against what it cost.
By Andre Dirckze, Principal Adviser, Wealth Effect Group
Ask an adviser what advice is worth and you will usually be handed a percentage from an industry study. The studies are useful, but they describe an average client and nobody walks in as one.
So here is one household, with the numbers. Peter and Megan are not their real names, and we have changed the figures and some details so they cannot be recognised. The shape of the problem, the three options and the reasoning are as they happened.
Where Peter and Megan started
Peter is 51, a salaried hospital specialist earning $305,000 a year, with employer contributions that already fill his concessional cap. Megan is 49 and was about to leave a salaried hospital role for private practice. Her first-year income was budgeted at $158,000, rising to about $246,000 by year four if the practice builds as planned. That if shapes everything that follows.
They owed $810,000: $512,000 on the family home and $298,000 on an investment apartment Peter bought twelve years ago for $776,000. It is now worth about $796,400, which is growth of roughly 0.2% a year. The rent of $26,400 did not cover strata, rates, insurance, management and $18,476 of interest, so the apartment cost them money every year and asked for patience in return.
Three other pieces were on the table. Peter was expecting an inheritance of about $318,000. He held about $264,000 of shares in a single listed company, accumulated over many years at a cost of about $97,000. And Megan’s super, after years of part-time work while their children were young, was $296,000 against Peter’s $812,000.
Megan wanted to stop at 60 and Peter at 62. They wanted to travel properly while they are well enough to enjoy it. And they did not want Megan’s first years in practice to be a period of financial anxiety.
The rule we set before any modelling
Money they already had is not value we created.
The inheritance was a gift from Peter’s family, not from us. The sale proceeds are the apartment’s value, which existed whether or not they ever called an adviser. A firm that books an inheritance as “value delivered” is marking its own homework. Our job was narrower: deploy what they had better than they would have alone, and prove it with numbers we would happily show a regulator.
So every dollar of value in this story is measured against a realistic alternative, which is Peter and Megan keeping their current setup and running it sensibly without us. In that baseline the inheritance goes straight into the offset account and every spare dollar follows it. We gave the status quo the benefit of every doubt.
Three strategies, modelled side by side
Strategy 1: keep the apartment
The status quo. Keep the property, park the inheritance and surplus cash in the offset, and let savings build once the home loan is covered. We assumed the apartment grows at 2% a year from here, which is generous against its record.
Strategy 2: sell and buy a better property
Sell, then buy a stronger investment property for about $1,385,000, with stamp duty and purchase costs of about $79,000. The sale cash and the inheritance become the deposit, leaving a new investment loan of $672,000 on top of the home loan. Total debt rises from $810,000 to $1,184,000 at exactly the moment Megan’s income becomes least predictable.
There is a newer catch. Under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, net rental losses on established residential property acquired after 7:30pm AEST on 12/05/2026 are quarantined from the 2027-28 income year. They can be used against residential rental income and gains, but not against salary. The apartment they own today is grandfathered. A replacement would not be.
For fairness, Strategy 2 gets every other part of the plan, including the super strategy and the travel budget. Only the property differs.
Strategy 3: sell, clear the home loan and diversify
Sell the apartment, repay its loan and add the remaining $474,000 to the inheritance. That $792,000 covers the $512,000 home loan (held in the offset so it stays accessible) and leaves $280,000: a $60,000 cash reserve for Megan’s first years in practice and $220,000 in a diversified portfolio outside super. From there, surplus cash is split between super, investments outside super and a travel budget of $15,000 a year.
Our assumptions
- Mortgage rate of 6.2% a year on all loans (illustrative; actual rates vary).
- Tax at 2026-27 resident rates (15%, 30%, 37% and 45%, with thresholds of $18,200, $45,000, $135,000 and $190,000), falling to a 14% bottom rate from 2027-28, plus the 2% Medicare levy. Peter’s marginal rate including Medicare is 47%.
- Concessional contributions taxed at 15% in the fund, plus Division 293 tax of a further 15% when income and concessional contributions exceed $250,000. Concessional cap of $32,500, held flat.
- Megan’s practice income of $158,000, $196,000, $228,000 and $246,000 over the first four years, then rising 3% a year. Peter’s salary rises 3% a year.
- Household spending of $212,000 a year plus $15,000 of travel, rising with 3% inflation, identical in all three strategies.
- Super returns 6.3% after fees and tax. Diversified portfolio 7% (3% income, 4% growth). Cash 4.4% before tax. Existing apartment growth 2%. Replacement property growth 5%, gross yield 3.1%.
- Net worth excludes the family home and Peter’s shares (the same in every strategy), and is shown after estimated selling costs of 2.5% on property and tax on unrealised gains estimated at 30% of gains above inflation.
- Retirement test: both stop work once they have no home loan and enough assets to fund $175,000 a year in today’s dollars to Megan’s age 92, assuming a 3.5% real return. That requires about $3,337,051 in today’s dollars.
The ten-year projection
Net worth on the definition above, year by year, in the base case.
| End of year | 1. Keep | 2. Replace | 3. Sell, clear, diversify | 3 compared with 1 |
|---|---|---|---|---|
| Year 1 | $1,577,664 | $1,492,555 | $1,592,893 | $15,229 |
| Year 2 | $1,796,437 | $1,748,331 | $1,839,528 | $43,091 |
| Year 3 | $2,045,535 | $2,040,221 | $2,121,302 | $75,767 |
| Year 4 | $2,316,163 | $2,344,726 | $2,413,351 | $97,188 |
| Year 5 | $2,599,837 | $2,669,612 | $2,722,971 | $123,134 |
| Year 6 | $2,896,684 | $3,012,700 | $3,051,535 | $154,851 |
| Year 7 | $3,207,345 | $3,370,424 | $3,401,700 | $194,355 |
| Year 8 | $3,533,283 | $3,750,688 | $3,774,812 | $241,529 |
| Year 9 | $3,876,139 | $4,159,992 | $4,172,302 | $296,163 |
| Year 10 | $4,236,820 | $4,595,871 | $4,595,685 | $358,865 |
| Year 5 / Year 10 | 1. Keep | 2. Replace | 3. Sell, clear, diversify |
|---|---|---|---|
| Non-deductible (home) debt | $0 / $0 | $298,246 / $0 | $0 / $0 |
| Home loan interest paid to date | $25,289 / $25,289 | $144,947 / $183,153 | $0 / $0 |
| Total debt | $298,000 / $298,000 | $970,246 / $672,000 | $0 / $0 |
| Accessible assets less home debt | $251,960 / $898,628 | -$298,246 / $254,536 | $811,223 / $1,742,897 |
| Super, both partners | $1,788,569 / $2,689,655 | $1,916,400 / $2,866,642 | $1,911,748 / $2,852,787 |
| Net worth | $2,599,837 / $4,236,820 | $2,669,612 / $4,595,871 | $2,722,971 / $4,595,685 |
Three things stand out. The status quo is not a disaster. Run sensibly, it builds real wealth, and it finishes $358,865 behind Strategy 3 after ten years.
Strategy 2 draws level with Strategy 3 by year 10. Stamp duty and purchase costs put it about $100,338 behind after year one, and five per cent growth on a geared property claws that back. On paper, a tie.
The paper hides the path. In Strategy 2 the household carries home loan debt until year 8, pays $183,153 of non-deductible interest along the way and has no accessible money, net of the home loan, until year 9. In Strategy 3 there is no non-deductible debt from day one and $344,229 is accessible after the first year.
Retirement: the base case and a bad start
The test that matters to Peter and Megan is the age at which work becomes optional. We ran it twice: once on the base case and once on a deliberately rough first three years, in which Megan earns 25% less than planned, mortgage rates sit 1.5 percentage points higher (then 0.5 points higher for good), share markets fall about 15% in year one before a slow recovery and property values go nowhere.
| Earliest retirement age (Peter and Megan) | Base case | Rough first three years |
|---|---|---|
| 1. Keep the apartment | 62.0 and 60.0 | 64.9 and 62.9 |
| 2. Replace the property | 60.6 and 58.6 | 63.9 and 61.9 |
| 3. Sell, clear, diversify | 60.6 and 58.6 | 63.0 and 61.0 |
In the base case the status quo gets them out at exactly 62 and 60, with no margin at all. Strategies 2 and 3 both arrive about 17 months early.
The rough start is where the strategies separate. Strategy 3 slips to 63.0 and 61.0 because the cash reserve and the absence of home debt absorb the shortfall. Strategy 2 slips to 63.9 and 61.9: in that scenario the home loan grows from $512,000 to $612,227 as shortfalls are redrawn, and the replacement property cannot help because its losses are quarantined. The status quo slips furthest, to 64.9 and 62.9.
The plan did not create their retirement. It made it much harder to knock over.
Medical, dental and allied health
Changing how you practise is one of the few moments when debt, super and tax can all be reset at once. If that is where you are, we can model it before you sign the lease.
Where the value came from
We separated the projected gain over the status quo into its sources by switching on one part of the plan at a time.
| Source of projected value | By year 5 | By year 10 |
|---|---|---|
| Using the super catch-up window | $37,671 | $73,033 |
| Investing surplus cash instead of leaving it in the bank | $8,125 | $109,134 |
| Selling the apartment and clearing the home loan | $77,338 | $176,698 |
| Total projected value over the status quo | $123,134 | $358,865 |
The apartment: sell, and keep the loss
Sold for $796,400 with selling costs of $24,400, the apartment returns $772,000. Against a cost base of about $838,000 before selling costs, that crystallises a capital loss of about $66,000.
A capital loss is a tax asset, not cash, and it has rules. It cannot be deducted from salary or practice income. It can only reduce capital gains, and any unused amount carries forward with no time limit. Peter had a natural use for it: the concentrated share holding.
The inheritance: the obvious home, and why we didn’t count it
Money in an offset account saves interest at the loan rate, and that saving is not taxed. At 6.2%, $318,000 in the offset saves about $19,716 of interest in the first year. To match that with a taxable investment, Peter would need a pre-tax return of 6.2% divided by (1 minus 47%), or about 11.7% a year, with no risk.
That is a compelling number, and it does not appear in our scorecard. Putting an inheritance against a home loan is something a sensible household does without an adviser, so our baseline does it too. The value we claim starts where the sensible default stops.
The catch-up window that was about to close
Carry-forward (catch-up) concessional contributions let someone with a total super balance under $500,000 at the previous 30 June use cap amounts they left unused in earlier years. Unused amounts are available for five years and then expire. From 01/07/2026 the annual concessional cap is $32,500. Megan’s part-time years had left unused amounts in every year from 2021-22.
| Unused cap amount from | Amount | Must be used by |
|---|---|---|
| 2021-22 | $24,100 | 30/06/2027 |
| 2022-23 | $25,300 | 30/06/2028 |
| 2023-24 | $23,600 | 30/06/2029 |
| 2024-25 | $26,800 | 30/06/2030 |
| 2025-26 | $26,600 | 30/06/2031 |
| Total | $126,400 |
Timing was the craft. Megan’s first year in practice is her lowest-income year, so a big deduction is worth least then. We used only the $24,100 that was about to expire, then $49,000 in year two and $53,300 in year three as her income rose. On our projections her balance stays under $500,000 at each test date, and her income plus contributions stays under the $250,000 Division 293 threshold in each of those years. The estimated tax saving, after 15% contributions tax, is $4,097, $11,014 and $14,202: $29,313 in total.
Leaving it until her income settled would have looked prudent and cost money. By years four and five, $73,000 of the unused amounts would have expired, and by year five her higher income would take her over the Division 293 threshold. The same idea, done late, saves about $17,088.
Peter is the honest counterpoint. His income puts him in Division 293, so his concessional contributions are effectively taxed at 30%, about $4,875 a year in extra tax. Every extra concessional dollar would save him only about 17 cents, and with a balance above $500,000 he cannot use carry-forward at all. For a medical couple, whose name the contribution goes in can matter as much as the amount.
Knowing when not to act
The shares were the hardest conversation. A single company made up a large slice of their investable wealth, and the obvious response was to sell the lot. The tax law made that tempting for another reason: the Tax Reform No. 1 Act replaces the 50% CGT discount for individuals from 01/07/2027 with cost base indexation and a 30% minimum tax on real gains.
We did not treat 30 June 2027 as a fire-sale deadline. The Act deems assets held through that date to be sold and reacquired at market value for working out the pre-July 2027 portion of the gain, which keeps its old treatment even if the asset is sold years later. So we sold about 40% of the holding in 2026-27, realising a gain of about $66,800 that the apartment loss almost entirely absorbed. Without the loss, that sale would have cost about $15,700 in tax. The rest is being diversified in stages, and how the remaining loss and the new categories of gain interact is detail we are working through with their accountant rather than assuming. Because the shares sit outside our projections, none of this is counted in the scorecard.
Value of Advice Scorecard
What the advice was worth, and what it cost
| Hard dollar value | Year 1 | By year 5 | By year 10 |
|---|---|---|---|
| Projected net worth above the status quo | $15,229 | $123,134 | $358,865 |
| Illustrative advice fees, cumulative | $14,910 | $38,670 | $68,370 |
| Projected value after fees | $319 | $84,464 | $290,495 |
| Projected value per dollar of fees | $1.02 | $3.18 | $5.25 |
| Opportunity and life value | What we measure |
|---|---|
| Retirement headroom | About 17 months ahead of target in the base case, against none for the status quo. Under a rough start, about 23 months better than the status quo. |
| Flexibility | $344,229 accessible after year one, about 18 months of spending, against home debt of $144,535 in the status quo. |
| Concentration | Largest single investment falls from about 37% of investable assets to about 9%. |
| Tax assets | A $66,000 capital loss put to work and a catch-up window used before it closed. |
| Life | Megan’s move into practice funded without home debt or a tight budget, and $15,000 a year of travel that does not cost them their retirement date. |
Fees are illustrative, based on our published pricing: a Foundation plan ($2,990), one Tier 3 strategy ($3,990) and one Tier 2 strategy ($1,990), then Comprehensive ongoing advice from $495 a month, held flat. The inheritance and the property proceeds are excluded from every value figure.
The year-one line deserves attention because it is close to breakeven: $15,229 of projected value against $14,910 of fees. Most of the value of a good decision arrives later, and the scorecard shows that rather than front-loading a number.
How we measure it every year
A plan is a forecast, and forecasts drift. Each year Peter and Megan’s review compares actual results with the projection and with the status quo they did not take. These are the year-one projections the review will be tested against.
| Measure | Status quo, end of year 1 | The plan, end of year 1 |
|---|---|---|
| Net worth | $1,577,664 | $1,592,893 |
| Non-deductible debt | $144,535 | $0 |
| Home loan interest paid | $12,028 | $0 |
| Tax saved through super catch-up | $0 | $4,097 |
| Super, both partners | $1,228,179 | $1,248,664 |
| Accessible assets less home debt | -$144,535 | $344,229 |
| Retirement headroom, base case | None | About 17 months |
| Largest single investment | About 35% | About 9% |
| Cash surplus after contributions and travel | $19,128 | $53,297 |
| Months of spending held in accessible assets | None | About 18 |
What other medical households can take from this
- A change in how you practise is a planning event. Income dips, structures change and windows open, including catch-up contributions that are about to expire.
- Division 293 changes the arithmetic for high-earning couples. The partner with the lower income and the lower balance is often where concessional strategies earn the most.
- Loyalty to an underperforming property is expensive. The question is what the same equity would do elsewhere, after tax and costs.
- A capital loss only has value when there is a gain to absorb it, so the gain is worth planning.
- A looming rule change is a reason to model, not a reason to sell everything before the deadline.
Their personal insurance was also reviewed with a specialist as part of the plan, because every projection above assumes both incomes keep arriving.
Frequently asked questions
Why not count the inheritance as value from the advice?
Because it was theirs before we met them. Counting existing wealth flatters the adviser. We count only the difference between our recommended path and a sensible path they could have followed on their own.
Is paying off the home loan always better than investing?
No. It depends on the loan rate, your tax rate, your need for access to cash and what else the money could do. An offset account keeps the interest saving while leaving the money available, which is why it suited a household with a new practice.
Who can use carry-forward concessional contributions?
People whose total super balance was under $500,000 at 30 June of the previous financial year, using unused cap amounts from up to five earlier years. A personal contribution also needs a valid notice of intent, acknowledged by the fund, before the deduction is claimed.
What is Division 293 tax?
An extra 15% tax on concessional contributions when income plus those contributions exceed $250,000. It applies to the lesser of the contributions and the amount over the threshold, so even high earners still receive some concession.
Can a capital loss reduce my salary or practice income?
No. Capital losses can only reduce capital gains. Unused losses carry forward indefinitely until a gain arrives to absorb them.
Does the new negative gearing rule affect property I already own?
Residential property acquired before 7:30pm AEST on 12/05/2026 is grandfathered. Established residential property acquired after that time has net rental losses quarantined from 2027-28. New dwellings are treated differently. Ask your accountant how the rules apply to your property.
Should I sell shares before the CGT changes on 01/07/2027?
Not automatically. Gains built up before that date on assets you already hold keep their existing treatment, worked out by reference to a market value at that date, even if you sell later. The right timing depends on your losses, income and the rest of your portfolio.
What does advice like this cost?
Our fees are fixed and agreed in writing before work starts. The figures in this story are illustrative. See how our fees work and how we measure the value of advice.
Book a chat
If you are a medical professional changing how you practise, carrying an investment that has stopped earning its keep or expecting an inheritance, start with a conversation. We will tell you honestly whether modelling it is worth your time.
General advice only. This story describes advice given to particular clients at a particular time. It does not take into account your objectives, financial situation or needs, so consider whether it is appropriate for you and read our Financial Services Guide before acting. Projections are estimates based on the assumptions stated, are not guaranteed and will differ from actual results. Tax and superannuation figures are current as at 14/10/2026; laws, caps and thresholds change. Tax matters in this engagement were confirmed with the clients’ accountant. Wealth Effect Group (CAR 424768) and Andre Dirckze (AR 395157) are Authorised Representatives of Boston Reed Pty Ltd, ABN 89 091 004 885, AFSL 225738.