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Tax Deductable Mortgage Option??

General Reagan Wright 22 May

There are several taxation and investment growth benefits to the Smith Maneouver.


What is the Smith Manoeuver? ™ 


  • It is a legal tax strategy that effectively makes interest on a residential mortgage tax-deductible in Canada.
  • The strategy has a remarkable snowball effect that generates large and growing annual tax returns, enables the homeowner to knock years off their life of a non-deductible mortgage, and builds an impressive financial portfolio at the same time. 
  • The Smith Manoeuver is not an overly complicated financial strategy but there are a number of moving parts.  Educate yourself from the source –


The Basics

  • By turning your mortgage into an ‘investment loan’ you can claim the interest that you pay on your mortgage.  This is done by first getting a readvanceable mortgage in Canada.
  • Readvanceable mortgages combine a mortgage with a home equity line of credit.  As you pay off your mortgage the credit limit of your HELOC increases.
  • You then borrow from your HELCO to invest.  Since your HELCO is now an investment loan, you can claim the interest that you pay as a deduction against your income.  You can then use the extra tax savings to pay your mortgage, which will allow you to borrow more money from the HELCO to invest.