Make Your Mortgage Tax Deductible

Equity Associates Inc. is not affiliated with this strategy. Please speak with your financial advisor for more details.

Convert mortgage interest into tax-deductible interest while increasing your retirement savings at the same time. The Smith Manoeuver achieves this goal. Find out more below:

Although Canada does not allow home-owners to write off their mortgage interest, the government does offer an investment incentive that allows Canadians to turn their mortgage  into tax-deductible debt. Tax deductible means that, at income tax time, you are refunded a portion of the interest paid on your loan. Made popular by Fraser Smith’s book entitled The Smith Manoeuver, this strategy helps ordinary Canadians access tax benefits that, previously, only the rich could afford to take advantage of.

The Smith Manoeuvre is a debt conversion strategy. It steadily converts your mortgage debt into a tax-friendly investment loan, which allows you to increase your assets while making any interest you pay tax-deductible. The result is increased net worth and reduced income tax.

Ninety percent of Canadians feel that they are unable to “get ahead” of their finances. The constant struggle of keeping up with mortgage payments means that the majority of Canadians are unable to build adequate retirement savings. They will rely heavily on government-funded programs that may not be sufficient.

A focus on paying down debt while delaying personal savings means that, by retirement, many Canadians are house-rich and cash-poor. They may have a home without a mortgage but are still struggling to find cash-flow each month. Thus, many are forced to either sell or refinance their homes. By implementing the Smith Manoeuvre strategy now, you allow time and compounding to be on your side so you can avoid such a situation and be financially secure in the future. The common misconception that you should pay your mortgage off first and then invest leaves you years behind those who chose to invest early.

The rich may be getting richer, but rather than complain, we can learn from their methods. -Fraser Smith

In the United States, mortgages are tax-deductible. This means that Americans pay significantly less interest each year on their mortgages. Savvy Americans funnel these savings into their retirement investments, helping them build a solid nest egg. One in fourteen Americans have reached millionaire status and, of those, 90% have taken advantage of this tax incentive in order to accumulate their wealth. Although Canadians’ mortgages are not directly tax-deductible, the Smith Manoeuvre allows us to have the same benefits.

It is projected that the number of Canadian millionaires is expected to rise 32% by the year 2020. With sound financial advice and strategies, it is possible for you to be a part of this club. Better Financial is proud to say that it helps its clients work towards and exceed this goal.

Note: The Smith Manoeuvre strategy must meet guidelines set by the Canada Revenue Agency. It is important that you work with a professional who is familiar with these guidelines and works within them to ensure that you are in-line with Canadian tax laws.

Contact us today for more information about implementing the Smith Manouvre.

  • Pay off your home sooner
  • Convert your mortgage interest into tax-deductible interest
  • Receive yearly tax refunds
  • Start compounding your savings earlier
  • Build your wealth


98.1 Free FM Better Tips

Better Financial teamed up with London’s 98.1 Free FM to provide listeners with daily financial tips that will help them save money and achieve their financial goals sooner.

All of our Free FM tips are posted below. You can listen to the tips or get more information on each tip below. Keep checking back as more tips are released.

For further information, or if you have any questions, please feel free to contact us and one of our professionals will be happy to help!

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Incentives for First Time Home Buyers

The Government of Canada offers two major incentives for first time home buyers. The Home Buyers’ Plan (HBP) and the First-Time Home Buyers’ Tax Credit (HBTC) can help you save money when buying your first home. Let’s find out a little bit about each of these incentives and how they can help.

1. Home Buyers’ Plan

The HBP allows you to withdraw up to $25,000 from your RRSPs to buy or build a home for yourself or a related person with a disability. To qualify, you must be a resident of Canada purchasing your first home. You also qualify if it has been at least 4 years since you last owned a home. Here are a few more details of the HBP:

  • If you are buying a home with a spouse, they may also withdraw up to $25,000.
  • The money being withdrawn must have been in the RRSP account for at least 90 days.
  • You have up to 15 years, starting the second year after withdrawal, to repay the RRSP. Your yearly repayment will be 1/15th of the amount you withdrew. If you do not contribute to your RRSPs for one or more of these years, the amount is added to your income at tax time.
Why Use the HBP?

The HBP is one of the only ways you can take money out of your RRSPs tax-free. It is a great way for people with RRSPs to put a downpayment on a new home.

But what if you don’t have an RRSP? The HBP can still benefit you! Many people planning to buy their first home open up an RRSP account to start saving for their downpayment. By putting their savings into an RRSP account, they receive a credit/refund at tax time. This can either be added to their savings or used to help pay for other expenses.

For more information see the Canada Revenue Agency’s Home Buyers’ Plan webpage.

2. First-Time Home Buyers’ Tax Credit

This incentive, part of Canada’s Economic Action Plan, gives first time home buyers a $5000 tax credit for the year in which they buy their first home. This credit can be shared or split with a spouse but cannot exceed $5000 total. This tax credit is applied to your income tax return, which means you can receive up to $750 worth of tax relief from the government.

Like the HBP, to qualify for this incentive, the home you purchased must be used as your principal residence. Simply mention to your tax preparer that you bought a qualifying home during the year and they can help ensure you receive your credit.

The Home Buyers’ Plan and First Time Home Buyers’ Tax Credit are great incentives offered to first time buyers by the Canadian Government. If you are interested in finding our more, please feel free to Contact Us and we will be happy to help.

Company Introduction

At Better Financial, we help you get the most out of your hard-earned money. Our range of services mean that we can set you up with a financial plan that is fit and efficient for your situation. Watch our introductory video to find out how this harmonization can help.