Tax Deductible Mortgages

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TDMP Certified Mortgage Agent

 

So, is your mortgage tax-deductible? Odds are I know the answer to that question before you make it, and that would be a resounding NO!

Unlike our counterparts in the US, and indeed the UK, Canadians’ mortgage interest on their principal residence or vacation home is NOT tax deductible. Unless, that is, the property was free and clear and you borrowed against it in order to specifically invest in something which would in turn generate taxable income.

This Revenue Canada (now reverently referred to as the Canada Revenue Agency) basic principle was first challenged a number of years ago by a lawyer by the name of Singleton. Mr Singleton owned a home, for which the interest was not deductible, a mortgage and some investments. In his wisdom he decided to sell the investments, pay off the mortgage, wait a few days for the dust to settle, then re-mortgage the home so that he could buy back the investments he had just sold. And what do you know? Voila!, hey presto!, immediately the mortgage interest became deductible on his very next income tax return. Furthermore Mr Singleton entered mortgage folklore having invented what became known as the “Singleton Shuffle”.

At the end of the millennium a gentleman from British Columbia by the name of Fraser Smith further developed the concept and wrote a book entitled “The Smith Manouevre”, encouraging Canadians to follow the same principle in order to convert their mortgages to CRA sanctioned tax-deductible debt. At that time we did not have a mortgage product which was tax-deductible friendly, so to speak, and the monthly administrative bookkeeping gyrations necessary to keep CRA happy and protect one’s tax status were somewhat cumbersome, so the manouevre did not become as universally popular as Mr Smith would have liked.

Over the course of the last few years several things have changed however. Firstly a number of mortgage companies have developed mortgage products that are friendly to the concept, and were indeed designed with this concept in mind, and which allow easy access to and transfers between the various required components of the mortgage plan, thereby facilitating the process. Secondly a company entitled “TDMP.com” (i.e. Tax Deductible Mortgage Plan.com) evolved, which has concerned itself with the finer points of the plan, such as the monthly administration required, liaison with CRA over any disputed tax claims, and believe it or not, an insurance element whereby, provided you use a TDMP sanctioned individual to file your tax return, TDMP will even pay any disallowed tax claim for you should you run into difficulties. Thirdly there is an investment component to this plan which can considerably enhance one’s retirement planning, especially when a diversified portfolio of investments includes investment in my lucrative Rent To Own program..

And this is where I come in. I have been appointed as one of the first TDMP certified mortgage agents in Ontario who is authorized to offer the plan. Since the internal workings of the manouevre are both highly sophisticated and very specific to each individual, I will not attempt to go into great detail here, but I would recommend that you first visit my TDMP.com web site at
http://www.tdmp.com/index.php/MB2055

Here you will learn much more about the plan, how it works, and you will have access to third party, non-biased articles and related information, including CRA Bulletin IT-533, published on October 31, 2003 as well as details on the Supreme Court of Canada’s January 2009 ruling on the Lipson case. You will also be able to take a simple on-line test to determine whether you qualify as a suitable candidate for the plan.


 

 

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