Canadians can increase Tax Deduction with Smith Manoeuvre

sarah · Joined: 19 Mar 2006 Posts: 25 5.06 Dollars($)

The Smith Manoeuvre involves a mortgage lending institution re-lending monthly payments on the principal. The funds borrowed are invested to get suitable profit, so that you can pay the monthly interest in time and then get your taxes deducted on the interest.

After the loan is amortized for 20 to 25 years, you will have an investment loan equal to the original home loan. But it will support a portfolio of investments that is often worth more than the loan as the return on investment compounds at an average rate of 10% per year. Thus, the Smith Manoeuvre provides a technique which helps Canadians in converting non-deductible mortgage debt into deductible investment debt.


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