The siren song is irresistible: “Make your mortgage tax deductible” or “Want to beat the tax man?” — is that a trick question? Who doesn’t? This is also accompanied by a warning — “Don’t try this at home. This stuff is so complicated that you need our help to do it”. While there is no [...]
I’ve written many posts about the investment pitfalls of the Smith Manoeuvre but not being a tax expert, I’ve skipped over the other risks involved in implementing the strategy. A column in the weekend’s Toronto Star quotes a tax specialist warning against the “dark side of the Smith Manoeuvre”: According to White [the tax specialist], [...]
This is the fourth part in a series on implementing a do-it-yourself Smith Manoeuvre. You may also want to check out Part 1, Part 2 and Part 3 of the series. Now that you are regularly withdrawing funds from the loan portion of your readvanceable mortgage and investing the proceeds in equities, there is only [...]
This is the third part in a series on implementing a do-it-yourself Smith Manoeuvre. You may also want to check out Part 1 and Part 2 of the series. Now that you have a readvanceable mortgage, the investing part is really simple. Open a separate investment account with one of the low-cost mutual fund providers. [...]
In a traditional mortgage, a little bit of the loan principal is paid down with every mortgage payment. The Smith Manoeuvre (SM) leverages the fact that interest expense on an investment loan is tax deductible (but interest on a mortgage isn’t) by taking out an investment loan equal to the principal payment portion of every [...]
About one year back, I did a review of The Smith Manoeuvre (SM) book and noted that the book should have talked about the pitfalls involved with the strategy. Many financial planners have left comments disagreeing with my review (though I reviewed the book, not the strategy) and I challenged one planner to show me [...]
There is a fair bit of discussion going on about The Smith Manoeuvre (SM) in Jonathan Chevreau’s columns in The Financial Post and on his Wealthy Boomer Blog. To recap, the SM involves two parts: in the first part the mortgage is paid down as fast as possible and in the second part a loan [...]
The author, Fraser Smith, is a Vancouver-based financial planner, who devised the eponymous strategy to take advantage of the fact that while the interest paid on a mortgage for a personal residence is not tax-deductible, any interest on a loan taken out to make investments (in mutual funds or stocks or a private business) is [...]
