Yes. If your principal residence mortgage is used for a business entity or an investment the portion invested is tax deductible.
You will need a readvancable mortgage. With a readvancable mortgage, every time you pay down principle on your home you are granted that amount on a line of credit. Once those funds are available you can re-advance them into your investment or business entity, making them tax deductible.
Or, take investments such as RRSP or TFSA and pay down your mortgage. Re-advance the funds gained in the line of credit and re-purchase the investments, which are now tax deductible.
The Tax Deductable Mortgage Plan
A Tax Deductible Mortgage Plan (TDMP) is when you set up a readvanceable mortgage and sell your non-RRSP assets (stocks, non-registered mutual funds, etc.) to pay down your mortgage. Then take the credit earned on your line of credit and repurchase the same investment, which turns your mortgage interest into a tax deduction.
As you make principle payments your readvancing credit can be used for a business entity or investment. The interest on the line of credit is tax deductible, giving you a return on your income tax. Take these funds and pay down your mortgage, and once again, readvance the funds from your line of credit.
Using this method can pay off your mortgage twice as fast while contributing to an impressive financial portfolio, and reduce your payments by nearly 30 percent.
The Smith Manoeuvre
The Smith Maneuver converts your principle residence mortgage into a tax deductible debt.
The Goal:
- Pay off your mortgage faster.
- Benefit from tax deductions.
- When you have paid your mortgage you have a large investment fund for retirement.
There are a number of lenders that offer The Smith Maneuver. Contact to discuss the best options and lenders.