Sarah A. Colucci, York Region's Mortgage Expert. Savings Guaranteed.
  • Home
  • WHY USE SARAH FOR YOUR NEXT MORTGAGE
  • APPLY ONLINE
  • PRODUCTS
    • Free House Value Tracker Report
    • CASH-BACK MORTGAGE
    • BRIDGE FUNDS
    • REVERSE MORTGAGES
    • SELF-EMPLOYED MORTGAGES
    • FIRST-TIME HOME BUYER PRE-APPROVALS >
      • FIRST-TIME HOME BUYER TAX CREDIT
    • MORTGAGE REFINANCE >
      • Prepayment penalties
    • SPOUSAL BUYOUTS
    • INVESTMENT PROPERTIES AND RENTALS
    • BRUISED CREDIT
    • PRE-APPROVALS
    • NEWCOMERS
    • DEBT CONSOLIDATION
    • HOME EQUITY LINE OF CREDIT
    • PURCHASE PLUS IMPROVEMENT PROGRAM
    • WHY INVEST IN REAL ESTATE
    • MORTGAGE RENEWALS >
      • New Mortgage Rules and Mortgage Renewals
    • SECOND MORTGAGE LOANS
    • LESS THAN 20% PROPERTIES
    • DOWN PAYMENT
  • CONTACT ME
  • PRIME RATE CANADA
  • CLOSING COSTS
  • DOCUMENTS REQUIRED FOR MORTGAGE FINANCING
  • MORTGAGE DICTIONARY
  • MORTGAGE NEWS
  • GOVERNMENT MORTGAGE RULES
  • MORTGAGE TIPS
  • HOUSE HUNTING CHECKLIST
  • APPRAISALS
  • FIXED OR VARIABLE RATE?

Sarah Colucci's Mortgage Blog

Stay enlightened about mortgage & real estate news in Canada.
Mortgage News 2022

Is the Interest on Your Mortgage Tax Deductible in Canada?

8/5/2019

1 Comment

 
Picture
Many borrowers wonder whether or not the interest they pay on their mortgage is tax deductible. Meaning, is there a way for them to save money on their taxes by writing off expenses related to their mortgage like interest paid as just one example. 

In the United States of America, citizens are able to claim the interest they pay on their mortgages against their taxes and as a result, experience tax advantages in making their mortgage payment.

Unfortunately, in Canada taxes don't not quite work this way. Instead, if Canadians sell their principal residence they automatically become exempt from paying Capital Gains Tax.  This saves them a tremendous amount of money as they don’t have to claim their sale profits as income and can sell tax-free. 

The story of how interest on your home’s mortgage got banned from becoming a tax write-off goes back to 2001 when a case was brought before the Supreme Court of Canada. The court’s decision in Singleton v. The Queen (“Singleton”) changed the way Canadians are able to organize their finances, particularly mortgage debt. 

As a result of the decision, while mortgages taken out for investment and business purposes can be tax deductible, mortgages for personal purchases are not. What the ruling essentially means is that as a taxpayer, you can organize your finances by claiming interest paid on your mortgage when purchasing personal assets such as a home ONLY if those mortgages (or secured lines of credit) are used to earn revenue or income from another property or business venture. 

A very common example of this is to borrow to invest against your principal residence. If you use your home’s equity to purchase an investment property, then you can claim the interest you pay against your taxes.

Are mortgages on rental properties tax deductible?

If you borrow against your principal residence to purchase an investment or rental property, then you can deduct the mortgage interest on the portion you borrowed to purchase the investment. If you borrow a portion of your house for investment, for example, making the basement into a legal apartment which generates income you could also be entitled to claim your mortgage interest as an expense. 

Should I convert my mortgage into being tax deductible?

In conclusion, in general, your mortgage payments against your principal residence for personal purchases are not tax deductible. Only under special circumstances could you pursue mortgage interest deduction from your taxes and possibly obtain a tax refund in some cases. 

However, if you are thinking of changing your home’s primary use to mixed use as in you make a part of it revenue generating with the ability to consistently earn income, you could start deducting interest on your tax return. 

This could also be a successful avenue to pursue to pay your mortgage principal down faster no matter what interest rate you have.
 

Therefore, no matter what, and before you do anything whether it’s finishing your basement or purchasing a rental property using your home’s equity, it’s important to check with the Canada Revenue Agency to be sure about what you can and cannot do when it comes to your mortgage loans. The rules may change depending on tax year. 

Should you require any additional information, please do not hesitate to contact my office at (647) 773-4849. We would be pleased to help you and answer any questions you may have.

Sarah A. Colucci
Mortgage Agent, Lic. M14000929
Mortgage Edge, Broker 10680 

​
1 Comment
Calcul Taxes link
3/17/2021 03:32:48

this is very usefull article! good work

Reply



Leave a Reply.

    Picture

    By: Sarah Colucci

    Senior Mortgage Agent, Lic. M14000929

    Archives

    January 2023
    October 2022
    September 2022
    July 2022
    June 2022
    May 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    August 2021
    July 2021
    June 2021
    May 2021
    February 2021
    December 2020
    November 2020
    October 2020
    September 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    February 2019
    January 2019
    December 2018
    August 2018
    May 2018
    April 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017

    Categories

    All

    RSS Feed

GET IN TOUCH WITH US

Let's get started today.



Address

411 Queen St. 
Newmarket, ON
​L3Y 2G9

Sarah A. Colucci, Mortgage Agent Lic. M14000929
Sherwood Mortgage Group
Licence # 12176

Telephone

Direct: 647-773-4849
​
Email: scolucci@sherwoodmortgagegroup.com
Picture
  • Home
  • WHY USE SARAH FOR YOUR NEXT MORTGAGE
  • APPLY ONLINE
  • PRODUCTS
    • Free House Value Tracker Report
    • CASH-BACK MORTGAGE
    • BRIDGE FUNDS
    • REVERSE MORTGAGES
    • SELF-EMPLOYED MORTGAGES
    • FIRST-TIME HOME BUYER PRE-APPROVALS >
      • FIRST-TIME HOME BUYER TAX CREDIT
    • MORTGAGE REFINANCE >
      • Prepayment penalties
    • SPOUSAL BUYOUTS
    • INVESTMENT PROPERTIES AND RENTALS
    • BRUISED CREDIT
    • PRE-APPROVALS
    • NEWCOMERS
    • DEBT CONSOLIDATION
    • HOME EQUITY LINE OF CREDIT
    • PURCHASE PLUS IMPROVEMENT PROGRAM
    • WHY INVEST IN REAL ESTATE
    • MORTGAGE RENEWALS >
      • New Mortgage Rules and Mortgage Renewals
    • SECOND MORTGAGE LOANS
    • LESS THAN 20% PROPERTIES
    • DOWN PAYMENT
  • CONTACT ME
  • PRIME RATE CANADA
  • CLOSING COSTS
  • DOCUMENTS REQUIRED FOR MORTGAGE FINANCING
  • MORTGAGE DICTIONARY
  • MORTGAGE NEWS
  • GOVERNMENT MORTGAGE RULES
  • MORTGAGE TIPS
  • HOUSE HUNTING CHECKLIST
  • APPRAISALS
  • FIXED OR VARIABLE RATE?