 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
| sevillemortgage.ca - Your
Canadian Mortgage Source. The mortgage broker for Canadians, by Canadians. |
|
|
| |
|
 |
 |
|
|
|
| |
 |
Moving?
Don't Get Caught
In The "Big Trap" |
|
|
Jim P. Maroney
B.B.A. (Hons), C.A.
Andrews Brown Maroney |
|
| |
| |
| If you're considering moving, make sure you're not caught in the big trap. This happens when people live in their humble abode for time eternal until the mortgage is finally paid off. Along with the urge to move to a new home, comes a desire to hang on to old "Betsy" and make some money on the side in the form of rental income. Often the mortgage-free homeowner heads off to the bank to borrow whatever money is needed to purchase a new piece of paradise. In many cases, the old home is provided as security to the lender for the purchase of the new home. The intent being to move into a new home, rent out the old home and write-off the interest on the new mortgage. Sounds pretty simple, so what's the problem?
The mistake that has been made here is to confuse the security for the loan with the use of the borrowed funds. Revenue Canada isn't particularly concerned about the security provided for the borrowed money. They are, however, very concerned about what the borrowed funds were used for. If the borrowed money is used to earn investment income, chances are the interest paid will be deductible. On the other hand, if the borrowed money is not used to earn investment or business income deductibility of interest is nothing more than wishful thinking. |
|
|
|
|
|
| |
|
|
|
|
|
|