The Smith Manoeuvre is a Canadian strategy that gradually converts your mortgage into tax-deductible debt. Our team includes an SMCP-certified Smith Manoeuvre professional, among the first in Atlantic Canada — here’s how it works, and how it applies to rental properties too.
In Canada, interest on your home mortgage generally isn’t tax-deductible — but interest on money borrowed to invest usually is. The Smith Manoeuvre uses a readvanceable mortgage (a mortgage paired with a HELOC that grows as you pay down principal) to gradually convert your mortgage into an investment loan.
Each regular payment reduces your mortgage principal, the same as any mortgage.
The paid-down amount becomes available room on your HELOC. You borrow it and invest it in income-producing investments.
The HELOC interest is generally tax-deductible. The resulting tax refund gets applied against your mortgage, accelerating payoff.
This is a simplified overview. The Smith Manoeuvre involves borrowing to invest, which carries real risk, including the risk of loss if investments underperform or interest rates rise. It is not right for everyone. For planning and discussion only. Not legal, tax, or accounting advice — always speak with your accountant and a mortgage professional familiar with the strategy before acting on it.
Our team includes an SMCP (Smith Manoeuvre Certified Professional), among the first to offer this strategy in Atlantic Canada. That means a structured, properly-documented approach rather than a generic HELOC set up on your own.
If you own a rental property with a mortgage that isn’t fully tax-deductible, cash damming is a related cash-flow strategy: rental income is directed to pay down that mortgage, while everyday personal expenses are paid using a separate line of credit. Over time, this can shift more of your interest costs onto tax-deductible debt.
Best suited to rental properties where the mortgage wasn’t originally used to purchase a fully tax-deductible investment.
Rental income pays down the property’s mortgage; a line of credit covers your personal spending, tracked and documented carefully.
Cash damming requires clean, careful record-keeping to hold up with the CRA — this is exactly where working with a certified professional helps.
For planning and discussion only. Not legal, tax, or accounting advice — rental cash damming has specific documentation requirements, and you should confirm your situation with your accountant before starting.
Our Smith Manoeuvre calculator gives a rough, illustrative estimate of years saved on your mortgage and projected portfolio growth.