Vancouver Real Estate Podcast VREP #350 | The Smith Manoeuvre Revisited with Robinson Smith
Dec 2, 2022
Robinson Smith, President of Smith Consulting Group and author of 'Master Your Mortgage for Financial Freedom,' shares his expertise on the Smith Manoeuvre, a strategy allowing Canadians to turn mortgage interest into tax-deductible investing. He explains how to leverage home equity for financial freedom, even in high interest environments, and details the types of investments that qualify for deductibility. With insights on market strategies and the emotional aspects of leveraging debt, Robinson empowers listeners to rethink their financial strategies.
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Convert Mortgage Into Investment Engine
- The Smith Maneuver converts non-deductible mortgage debt into tax-deductible investment debt while continuing monthly mortgage payments.
- This restructures cash flow so homeowners invest monthly and use tax refunds to prepay mortgage principal faster.
Use A Readvanceable Mortgage Correctly
- Get a re-advanceable mortgage with a HELOC that increases as you pay principal so you can borrow back to invest monthly.
- Invest borrowed funds (not consumption) and use resulting tax refunds to prepay mortgage principal annually.
Borrow To Invest, Not Consume
- Borrow back only to invest with a reasonable expectation of generating income so interest becomes tax deductible.
- Take tax refunds each year and immediately make mortgage prepayments to accelerate debt conversion.
