New Tax Deductible Mortgage in Canada using The Smith Manoeuvre. Strategies to Optimize your Retirement.



Are you interested in paying down your mortgage sooner and also saving more for retirement? Most Canadians prioritize one or the other but rarely accomplish both at the same time. The Smith Manoeuvre allows Canadians the opportunity to make their mortgage tax deductible and start optimizing their retirement.

Canadian real estate investor Darren Voros sits down with Robinson Smith to discuss the Smith Manoeuvre. The Smith Manoeuvre allows Canadians to make their mortgage tax deductible by making a few simple changes. By using the Smith Manoeuvre you can pay down your mortgage faster and grow your net worth in less time.

ROBINSON C. SMITH operates Smith Consulting Group Ltd, out of Victoria, B.C, on Vancouver Island. He has an extensive history in the investment space, both international and retail. Robinson has a double major in Chinese Studies and Economics from the University of Victoria and an MBA in International Business from Simon Fraser University.

https://smithman.net
https://www.facebook.com/TheSmithManoeuvre/
https://www.linkedin.com/in/robinson-smith/
[email protected]

****DISCLAIMER:
With any and all investing you should always obtain independent legal, taxation and financial advice from a licensed professional before investing any of your own money.

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Darren Voros

Darren’s diverse skillset has taken him to many stages around the world. He has been featured as an on-air renovation expert on “The Goods” (CBC) and “CityLine” (CityTV). Darren was also the behind the scenes contractor on “Save My Reno” (HGTV) and “Game of Homes (W Network).
Darren is an accomplished real estate investor, trainer and coach. He controls a portfolio of properties worth just over $10,000,000 and has travelled across North America educating, inspiring and motivating audiences on the subject of real estate investing, financial independence and financial literacy. Darren’s willingness to give back prompted him to launch his YouTube channel in 2020 in order to have a wider reach in educating investors.

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33 comments

  1. Hi Darren! Thanks for the great content. I am really confused with one of the concepts here and hoping you can clarify this a bit.

    Questions:
    1. Let's say a Rental Property income is $2000/month & mortgage is $1600 ($500 Principal $900 Interest) Rental Expense is $400, and it ($2000) is first used to pay $1600 Mortgage + $400 (extra principal payment). Hence $0 cashflow from rental income.
    2. You take out ($500 Principal + $400 Extra paid) from HELOC
    3. Use $500 for the stock portfolio and the extra $400 to pay off the rental expenses.
    Q: Is the $400 (from HELOC) to pay off rental expenses, tax-deductible? (since it is used for rental property expenses?)

    I really appreciate your time and thanks!

  2. I was told by an RBC mortgage broker that I can only borrow up to 65% on my home price inside HELOC. How can I borrow up to 80% as in this example? Please let me know a leeway!

  3. Krystle Royse

    I thought we could only take out a home equity line of credit in Canada if we had 35% equity and above but he said he does it right away, can you please advise if this is something that can be utilized with little down on the home?

  4. fahad waliany

    I think you missed a ZERO in the $400,000 lol hahahahahahahaha

  5. Tobi Ayanleke

    I think this is my very 1st comment on Youtube :-). This was really insightful and helpful. I will be watching the other part of this video. Great coming across your channel Darren.! Thanks!

  6. Thanks for the information. Say I make a prepayment of $2K from my rental income to my mortgage on my principal residence, I then I take the full $2K from the HELOC (re-advanceable loc) and pay the mortgage on the rental property? Or do I take $2K minus the interest and pay for the mortgage for the rental property? If the latter is true, then I have to come up with my own money to pay the difference, correct? Thanks

  7. Thanks. First I hear of readvancable mortgages. Can you get one for investment properties? I assume the investment has to be made outside of a registered plan in order for you to make the interest tax deductible? Maybe I missed it but I assume you’re paying the standard monthly mortgage + interest on the readvancement amount you pull to invest so you would need extra cashflow to cover this too, right? At the end of the amortization, you would just be paying the interest on the total readvancement amount, right?

  8. A Hiloc isn't 100% the mortgage. The bank only gives 60% of the equity in your house.

  9. Emmanuel Sepulveda

    the title is (pay off your mortgage in 10 years) and all they do is talk shit about paying off your mortgage instead they are advising you to use the equity you have and get your self in debt again. Fucking crooks

  10. Emmanuel Sepulveda

    these crooks are so stupid they dont even undertand their own scam

  11. Emmanuel Sepulveda

    dont listen to this crooks

  12. ProudCanadianEh

    Darren I just stumbled upon your channel and I am so happy I did! Thank you man keep it up, it was difficult to find quality content for CANADIAN real estate investors. Thank you so much and please keep it up!!

  13. Runs to call CIBC to stop fortnightly mortgage payments and move to monthly

  14. Fragrant Diarrhea

    is this line of credit HELOC?

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  16. Markalo1025348

    I remember seeing this 10-15 years ago but I was young and didn't know any better and listened to the "old wise people". I wish I would have just gone outside the box and followed this plan back then.

  17. Is this even real? 😯

    Thank you for sharing!

  18. This scheme is not that easy as he makes it sound. Federal Tax law in Canada requires qualification to four criteria in order for the interest on a loan to be deductible. 1) the borrowed cash must be used to generate income (capital gain from appreciation of a security/share does not qualify as business income). 2) interest must be paid in the same year as the deduction claim (except Quebec where interest deduction can not be greater than the business income for the year but allows unused interest for arrear or future years). 3) legal obligation to pay interest at arms length. 4) interest charge must be reasonable and according to the day’s market.

    So to sum it up interest deduction of borrowing money to invest into securities/stocks market on the income tax would only work if the securities/stocks pay interest/dividends. Or maybe doing day trading. A capital gain on stocks sell off does not meet the business income criteria.

  19. myfinancialtips

    So isnt this almost the same as a heloc?

  20. Great video! Rookie question, if you use this to invest in rental property (not primary residence), how to the capital gains tax implications relate to your overall investment upon selling the property? Is it still worth it?

  21. Excellent video. What kind of investments you would buy in margin account that generate 7% consistently as shown in his calculator demo , once you have principle available by making mortgage payment .

  22. Saurabh Kumar

    Skip to 9:40 for "how does the smith manoeuvre work" talk to begin.

  23. Hello, thanks for the great video!! 
    I have a couple questions:
    – how do you know that the first interest payment (at the end of the month) on the heloc is going to be fully covered by the second principal payment and so forth?
    -If i make a lump sum payment, how do i reajust the interest for my HELOC?
    -when the mortgage is completely paid off and i want to take out my money from the un registered account, there are going to be taxes that have to be paid for capital gains?

  24. Daylee James

    Question: If I am mortgage free already, is the smith maneuver something i can do still in order to invest more?

  25. James Anderson

    Great video I’d like to see you separate yourself from the others on YouTube in this subject and have Mr Fraser breakdown the flow of cash from into the mortgage then to the heloc then to the investments and then the gains and interest Payments. There is nothing like this out there and it would be great to go in-depth much more to get a better idea of where money goes to and from which accounts. Thanks!!

  26. Question:
    My positive cash flow from my rental property is approximately $350 per month.
    Can I somehow make that $350 a month tax deductible as well, by using this same strategy?

  27. Nick Janssen

    So as ur balance owing on the heloc grows how does it eventuslly get paid off? You always use your tax return to decrease it?

  28. Clouded Journey

    Makes a lot of sense! gotta set this up..

  29. Wow!

  30. oleksandrsyomin

    Wow! Mind blowing

  31. Michele Fisher

    Wow! This is amazing!! I would like yo know more for sure!! Wow!! Thank you so much!

  32. Wow…

  33. Ivana Ilic Stewart

    Awesome!
    Looking forward to the next part 🙂
    Thanks

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