The Smith Manoeuvre
As a Canadian there are a few facts that we know are true
o In every fiscal year you will work till June 21st Just to pay the taxes on all levels of government.
o The interest on your mortgage is not tax deductible.
o It is difficult build a portfolio that will provide a comfortable income.
o Most Canadians will live an average of 15-25 years post retirement.
o We can save but we find it hard to put away adequate sum without affecting our lifestyle.
So what is the solution? Can we ever pay off our mortgage debt and look forward to a comfortable retirement? At our current savings rate will be have enough income to provide for longevity post retirement? Or for the cost of long term care? Can we depend on CPP?
I don’t pretend to have the magic wand. But I want to illustrate a is a new technique described in a book by B.C. financial strategist, Fraser Smith that gradually converts your non-deductible Canadian mortgage into a tax deductible investment credit line. He is being heralded for giving ordinary taxpayers the same advantages as the wealthy.
“The rich may be getting richer, but rather than complain, we can learn from their methods,” says Smith. If setup and executed properly the Smith Manoeuvre may generate huge tax refunds for you.
The Smith Manoeuvre converts the mortgage from bad debt into “good debt.” It uses the equity that’s building in your home doing nothing and converts it to an investment loan. This is considered “good debt,” because it is tax deductible and generates large annual tax refunds. It can be used to purchase investments that, over time, can grow many times faster than the interest on the loan.
The expected profit from the Smith Manoeuvre is surprisingly large because of the tax benefits and the effect of compounding over many years.
The Smith Manoeuvre is sometimes rebranded and promoted by organizations and mortgage brokers who charge upfront fees and ongoing monthly fees. Beware. You do not need to pay, such fees. All you need team reliable financial experts. You need the services of a mortgage broker to setup you mortgage and line of credit efficiently, a financial planner to help you choose investments wisely, and file your income taxes using an accountant.
Do You Qualify?
The Smith Manoeuvre is for qualified Canadian Homeowners only. You must have a minimum of 20% equity in your home, verifiable income and excellent credit to consider this strategy. Self employed clients can also qualify.
Call us for your free consultation at 705-720-2122