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You’ve probably heard mortgage debt called “bad debt.”

Something to pay off as quickly as possible.

Something that doesn’t help you — just drains your monthly cash flow.

But what if that mortgage could work for you instead?

And what if the interest — typically just a sunk cost — became a tax deduction?

For savvy Canadians, there’s a strategy that does just that.

It’s called the Smith Maneuver — and it’s been around for decades.

Now, let’s dive in.

That’s when it hit me: they didn’t need a better rate — they needed a better plan.

If you’re like most homeowners in Canada, your mortgage interest isn’t tax-deductible.

You pay down your loan.

You build equity slowly.

And each payment chips away at principal — but doesn’t generate any return.

Compare that to how investors and business owners operate.

They borrow to invest — and deduct the interest.

The tax code rewards people who use leverage strategically.

So why aren’t homeowners taking advantage of that too?

Because most banks don’t talk about it.

And traditional mortgage setups don’t support it.

At its core, the Smith Maneuver helps you convert non-deductible mortgage debt into a tax-deductible investment loan.

Here’s how it works — in plain English:

• You start with a re-advanceable mortgage.
  
  (This is a mortgage + line of credit that grows as you pay it down.)
  
  Read more on how HELOCs work here
• Each month, as you pay down your mortgage principal, your line of credit expands.
• You then reborrow that newly available credit — and invest it into income-producing assets.
• Over time, your mortgage is replaced by a fully tax-deductible investment loan.
  

You’re not increasing your debt load — you’re just repurposing it.

Done right, the Smith Maneuver can help you build wealth in multiple ways.

First, the interest on your investment loan becomes tax-deductible.

That means you could receive a refund or reduce what you owe — every year.

Second, you’re investing monthly as your mortgage gets paid down.

That’s dollar-cost averaging — with built-in discipline.

You’re not relying on a lump sum or market timing.

Third, you’re accelerating your net worth growth.

Instead of waiting 25 years to own your home and then invest, you’re doing both.

And the best part?

It’s structured.

It’s automated.

And when paired with smart financial planning, it’s surprisingly sustainable.

You’re not increasing your debt load — you’re just repurposing it.

This strategy isn’t one-size-fits-all.

But it can be incredibly powerful for:

• Homeowners with stable income and manageable debt
• High earners looking for tax-efficient ways to build wealth
• Long-term investors comfortable with moderate market risk
• Anyone with equity in their home who’s ready to be strategic

If you’re already investing in RRSPs or a TFSA and want to add a tax-advantaged layer — this may be worth exploring.

Especially if your current mortgage is just… sitting there.

You’re not increasing your debt load — you’re just repurposing it.

Let’s be clear — this isn’t a get-rich-quick tactic.

It’s not right for everyone.

Here’s when it might not be the best fit:

• If you’re risk-averse and don’t want to invest in markets
• If your income is unstable or your budget is already tight
• If you’re planning to sell your home in the next few years
• If you’re not disciplined with credit or long-term strategies

Like any investment move, it comes with responsibility.

But if you’re thoughtful and consistent, the payoff can be meaningful.

You’re not increasing your debt load — you’re just repurposing it.

Thinking this could work for you?

The first step is reviewing your current mortgage setup.

Not all mortgages are re-advanceable — and not all lenders offer this structure.

So we’ll need to look at whether a refinance is needed.

Read more on refinance options here

Next, we assess your current equity position.

Then we model what this could look like — tax-wise, cash flow-wise, and long-term.

The Smith Maneuver flips the script.

It puts your equity to work.

It turns sunk costs into tax savings.

And it builds wealth while you do what you’re already doing: paying off your home.