Are You Planning the Purchase of an Investment Property?

If so, we can create a financing strategy can offer added income tax incentives. If you have saved a down payment or will be liquidating an investment for the down payment, you may be missing an excellent opportunity from a tax perspective.

If Your Principal Residence Has a Mortgage...

Consider prepaying or refinancing your existing mortgage on your principal residence by the amount of the down payment THEN borrow the down payment back through a line of credit mortgage on your principal residence. Finance the balance of the rental property purchase through a mortgage on that rental property. Ideally, both the line of credit on your principal residence to fund the down payment AND the new mortgage on the rental property can be set up with interest only payments on the mortgage loans.

Rather than paying down the principal on the rental property mortgage, divert the income from the rental property to pay down the principal owing on the mortgage on your own residence.  To further discuss this process, the "Smith Manoeuvre", please contact us.

If You Have a Mortgage on an Existing Investment Property...

Consider refinancing the existing mortgage on the investment property and consider an interest only mortgage product (as principal payments on an investment property are not a deductible expense against the rental income for taxation purposes). The additional equity released through the refinance will serve as a down payment for the purchase of an additional investment property.

Finance the balance of the new rental property purchase through a mortgage on that rental property again, considering an interest-only mortgage on the newly purchased property.  

Proud Supporters of the Canadian Dream