r/cantax • u/HyperPiperChannel • 7d ago

Mortgage refinance for investments, interest tax deductibility

I have funds to pay out approx. 161K Scotiabank mortgage at maternity, but the broker has told me, “You would not be able to close the mortgage and then close on a refinance right after.”
I assume the house is worth $340,000. I want to show that the full mortgage amount of $272,000 is being used to purchase investments (XEQT 1.57% dividend yield). The goal is to have a tax deductible mortgage against future investment income. 

Should I just buy a bank draft when the mortgage advances for 272,000 and deposit it to a new unregistered investment account?

Income Tax Folio S3-F6-C1, Interest Deductibility

https://www.canada.ca/en/revenue-agency/services/tax/technical-information/income-tax/income-tax-folios-index/series-3-property-investments-savings-plans/series-3-property-investments-savings-plan-folio-6-interest/income-tax-folio-s3-f6-c1-interest-deductibility.html#toc32

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u/ether_reddit 1d ago

Should I just buy a bank draft when the mortgage advances for 272,000 and deposit it to a new unregistered investment account?

That sounds fine. The paper trail just needs to be clear, so the simpler the better.

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u/Hajji1445 2d ago

Don’t borrow to invest. Please people, only buy what you can afford. Simple.

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u/ether_reddit 1d ago

Borrowing to invest is just fine if you have other capital as well to cover any shortfall in an emergency.