How to make your mortgage tax deductible (the Smith Maneuver) ?

Who does not want to:

• Pay off their home loan more quickly - taux hypothécaire • Reduce taxes and • Better prepare for retirement

There is a mortgage strategy called “the Smith Maneuver” that lets you achieve all of these goals, all at the same time - taux hypothécaire.

This particular mortgage strategy is named for its developer, Fraser Smith. Mr. Smith is a financial planner in British Colombia who invented this interesting strategy a few years ago. I was fortunate enough to be one of three mortgage consultants from Quebec to meet Mr. Smith when he spoke on this concept in Toronto.

This strategy uses a mortgage product that was conceived for this purpose. It allows the homeowner to contribute to investment or pay business expenses and use this interest debt to reduce the interest to generate tax deductions. This concept can work in a number of ways, and if you use it properly, you can limit risk and improve the efficiency of the program. Since it has so many components, the best thing is to discuss it by phone so that the best scenario for your case can be worked out. We work with financial planners who understand this strategy and can coordinate all of the pieces just for you (taux hypothécaire).

Advantages

• Allows you to pay off your mortgage sooner • Permits you to save on taxes • Allows you to establish a savings plan for your retirement • Is best for those in high income brackets • Works best for the self employed, but works for salaried people as well • The strategy has been approved by financial planners, accountants and tax lawyers • It is possible to put the necessary home loan for this strategy in motion but do not start it too late • The strategy can be completely automated • There are no additional fees involved to put a Smith Maneuver strategy in place

Disadvantages

• It is recommended for those with a home loan that is 75% of the value of their residence • The strategy requires that the borrower can increase his payments by 2% per annum • If the investment component is used (mandatory in the case of a salaried employee), there is always the risk associated with the investment • In order to reduce the risks associated with the investment, this kind of mortgage should be used over the longest possible period (10 to 15 years or more) • The borrower should have a good understanding of certain principles of investment, or the help of a financial planner

When to use this strategy for the long term

This strategy can be used in many situations, for all kinds of properties, and for every status of employment. The higher your taxes, the better this strategy works. This strategy can be used with other strategies depending upon individual requirements (taux hypothécaire).

Conclusion:

Fraser Smith developed a strategy that helps us respond to three important questions:

- How can I pay down my home loan more quickly? - taux hypothécaire - How can I save on taxes? - How can I save more money for retirement?

For more information on this type of mortgage strategy, get in touch with us and you will learn how the principles of the Smith Maneuver can help you with your home loan and your taxes.

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