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Smith Maneuver – Is your mortgage tax deductible?

I had a couple of my clients asking about the recent advertising on the radio and in the news papers with the tag line, “Is your mortgage tax deductible?” and wanted to know if it’s something that they can use. I had heard about the Smith Maneuver for the first time back in 1999 and did some research on it at that point but as time goes on, things change and with the new burst of advertising, I decided to re-familiarize myself with it.

The idea of the program is that any monies that you pay in your mortgage are re-advanced to you as a Home Equity Line of Credit which you use to invest in the money market. As the funds are invested, Canada Revenue Agency (CRA) gives you the option of writing off the interest that you have paid on the monies that you have borrowed (same as the principle paid). The monies borrowed are invested in a registered fund which helps you generate a return to help payoff the mortgage quicker.

There’s also an accelerator which is any equity to have in the house! They recommend that you take the equity out and put it in another account which will give you a nice chunk to accelerate your mortgage payments.

It’s hard to explain this in a blog because of all the numbers and loops that it goes through. All I would recommend to ANYONE thinking about investing in this, PLEASE MAKE SURE YOU GET INDEPENDENT ADVISE ON YOUR SITUATION! I can’t stress it enough. You need to make sure you are consulting with an accountant, Lawyer and financial planner who is NOT selling you anything!

There are better ways to pay off your mortgage faster than having to go through this process. It makes great sense on paper but there’s an old saying, “If it sounds to good to be true, it might not be true!”

The contributing factor,

Addy Saeed
Real Estate Sales Representative
Re/max Active Realty Inc., Brokerage
Web: http://www.HeyAddy.com

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2 comments

  1. Superb website you have here but I was curious about if you knew of any discussion boards that cover the same topics talked about here? I’d really like to be a part of online community where I can get comments from other knowledgeable people that share the same interest. If you have any recommendations, please let me know. Thanks a lot!

  2. Sorry, I don’t know off any… I’m sure if you google it, you can find the information

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