Did you know it’s possible to write off your mortgage interest on your primary residence against your taxable income?

Here’s the scoop on how it works. Even though Americans have had tax deductible mortgages for years, Canadians still don’t enjoy that privilege. However, there is a way for you to deduct your mortgage interest while increasing your wealth.

Known as the “Smith Manoeuvre”, this strategy involves continuously withdrawing equity from your home and investing it. Of course, when you borrow money for an investment, the interest is tax deductible. So if you borrow money from your home equity to make investments, your mortgage interest becomes tax deductible.

To make this strategy work, you need a readvanceable or line-of-credit mortgage that lets you continuously extract equity as you pay your mortgage down.

Every time you make a payment and reduce your principal, you then immediately extract that equity and add it to your investment account. Since you’ve been able to deduct your mortgage interest, at the end of the year you’ll generate a tax refund that you can use to make a lump sum payment on your mortgage–which makes even more funds available for investment.

Combining this tax deductible mortgage with a sound investment strategy can significantly increase your net worth over the long term. To find out more about how the “Smith Manoeuvre” can work for you, give us a call today or access these other resources: