The average Canadian pays 43% of their income to taxes with the majority of that being income tax and just 36% on necessities like food and mortgage. That doesn’t leave much at the end of the year to save and invest.

The interest you pay on your mortgage interest isn’t tax deductible in Canada. But The Smith Maneuver strategy fixes that.

The Smith Maneuver is a one-time restructuring of your mortgage (with a little bit of regular maintenance) that converts your mortgage interest into tax refunds, all while building your portfolio of investments for retirement.

Your house is possibly one of the biggest assets you’ll ever own, so it just makes sense to use it as a tool for building wealth.

I am a Smith Maneuver Certified Professional Mortgage Broker and I can help you take advantage of this sophisticated (and powerful) financial strategy to improve your tax refunds and build an investment portfolio.

How does the Smith Maneuver work?

The Smith Maneuver is a tax strategy that works hand-in-hand with a unique mortgage known as the “readvanceable mortgage.” A readvanceable mortgage combines a regular mortgage with a home equity line of credit. As your you make your regular monthly payments, the regular mortgage gets paid down and the HELOC limit grows. If you make pre-payments to your mortgage, the HELOC grows faster.

But your HELOC is used for a specific purpose. Instead of using it to buy a car or go on a vacation, you’re going to use it to fund an investment account.

The magic is in that key detail. When you borrow to invest, the interest you pay on the loan is a tax deduction. The faster you pay down your bad (non deductible) mortgage, the more powerful this strategy becomes, which results in a bigger tax refund.

Logical, Step-by-Step Framework

Once you understand how it works, The Smith Maneuver is actually fairly simple. But when you first read the strategy it can feel a bit overwhelming.

I’ve created private resources just for my clients to simplify the concepts, boiling them down to their core principles. If you feel a bit confused now, don’t worry. I’ll make it clear with custom flow charts and diagrams.

The Smith Maneuver is only useful if you stick with it. And you’re more likely to stick with it if you actually understand what you’re doing. By working with me on your mortgage, you’ll get access to my step-by-step framework I’ve built specifically to make The Smith Maneuver as straightforward and logical as possible.

Benefits of The Smith Maneuver

Cut 7-10 years off your mortgage: You could be mortgage free up to 10 years sooner, without increasing your monthly payments. And you’ll be able to save for retirement at the same time.

Simple, one-time setup: You’ll receive a free, custom report on the estimated financial benefit based on your unique situation. If you decide it’s a good fit, we can have the new mortgage structured in as little as 30 days.

Advanced techniques used by the wealthy: Implement the little-known strategies used to help make your mortgage tax efficient much faster, increasing your lifetime tax benefits.

Smith Maneuver Certified Professional: You’ll work with a Smith Maneuver Certified Professional mortgage broker with the expertise required to structure tax deductible mortgages properly to generate maximum tax returns.

Competitive Rates + No Fees: For you, working with me is all upside. I’ll coach you on how to implement the strategy to maximize your tax returns without charging any fees for my service.

Who should do The Smith Maneuver?

The Smith Maneuver is a sophisticated tax strategy that could benefit most homeowners in Canada. But the higher your personal income taxes, the more benefit you’ll see.

Keep in mind, The Smith Maneuver cannot be used to reduce corporate taxes. It’s only for income you declare on your personal taxes. Examples include salary, commission,hourly income, self-employed income from a proprietorship, rental income, or investment income.

Who is eligible to use The Smith Maneuver? 

The Smith Maneuver might be a good strategy for you if the following is describes you:

  • Ownership: You can either own a home or plan to buy a home.
  • Property Use: This strategy only works on your primary residence. Which is fine, because by default the interest on a rental property is already tax deductible. That said, if you own an investment property, the rental income you earn can be used to accelerate The Smith Maneuver strategy.
  • Income: You should have stable, verifiable income. If self-employed you need to have more than 2 years in business. If salaried you need to be off probation and be able to produce pay stubs, T4s and a letter of employment.
  • Equity: You need at least 20% down payment (if purchase) or 20% equity (if refinance). Meaning it doesn’t work on high ratio mortgages with less than 20% down. If that’s your situation, you’ll just need to wait until you pay down your mortgage a bit and/or your home value increases to a point where we can refinance your home with enough equity.
  • Credit: Excellent credit is required. Small exceptions within reason can likely be accommodated on a case-by-case basis.
  • Risk Tolerance: You should be comfortable investing over the long term. You get to decide the level of risk for your investment. It could be stocks, bonds, mutual funds or any valid investment account (but not registered retirement savings plans or other tax-advantaged accounts).
  • Assets (optional): The Smith Maneuver strategy can be accelerated if you have liquid, non-registered assets. Cash, stocks, bonds, mutual funds, etc.
  • Investment Properties (optional): Rental properties can help accelerate this strategy. However, you can only have a limited number of investment properties while remaining eligible for The Smith Maneuver is limited. This is simply due to lender restrictions.

Getting Started

Implementing The Smith Maneuver is fairly straightforward once you understand how the money flows But the concepts can feel overwhelming, especially if you’ve only read The Smith Maneuver book without walking through the steps with someone who has experience using the strategies.

Step 1: Book a discovery call

When you reach out to me I’ll book a 15 to 30 minute call with you. We’ll go over your financial situation, goals, concerns, and the Smith Maneuver strategy itself.

If the strategy is a good fit and you are interested in learning more, I’ll send you a checklist of the documents you’ll need in order to move forward. At this point the ball will be in your court. Mull it over, talk to your partner if applicable, and decide what you want to do next.

If necessary, we can book a follow-up call to answer any questions that might arise after the initial discovery call.

Step 2: Perform a cost-benefit analysis

Once you send me your documents I’ll spend a few days performing a complete analysis of your unique financial situation. Then, I’ll put together a report of the expected long-term benefits you could expect to see by implementing the Smith Maneuver strategy. We’ll also discuss lender options and timelines.

Step 3: Setup your mortgage

When you’re ready to move forward, I’ll submit your application to the lender. I’ll work to secure an approval and satisfy the lender’s conditions. The end-to-end process (from submitting the application to meeting with your solicitor) usually takes about 30 days. The lender will send instructions to your solicitor so you can go in for a signing meeting.

Step 4: Implement the strategy

Once the mortgage is funded, we’ll wait a few days for you to gain access to your online banking accounts.

I’ll then coach you through setting up all the necessary accounts to ensure that the cash is flowing correctly. I’ll provide you with a checklist of what to do during each month, quarter, and year at tax time.

Remember, this is an ongoing financial strategy, so it won’t be a “set it and forget it” avenue for managing your affairs. You’ll have to take certain steps (about 10 minutes per month) to ensure that the strategy is working correctly.

It’s also not a move to make on your own. If you don’t already have a financial advisor or tax accountant that is well-versed in the Smith Maneuver, then I can introduce you to one. This will ensure that you continue to meet the CRA’s requirements for using this strategy, and that it will work proactively to grow your wealth and lower your debt.

Launch your Smith Maneuver Today

Ready to schedule your discovery call? Click here to contact me.

Frequently Asked Questions

Yes, the Smith Maneuver is 100% legal. The CRA has reviewed and approved the strategy. That said, you need to make sure you select the correct investments and file your taxes properly. I can help you with setting up a compliant mortgage and can introduce you to accounting and investment professionals, on request.

It’s certainly possible. If you want to try, I suggest you read the book first to give yourself a basic understanding of the strategy. However, enlisting the help of an expert can make a big difference when you’re setting up the Smith Maneuver. 

First, the book is a little bit confusing. I have yet to meet someone who reads it cover-to-cover and then walks away with a crystal-clear understanding of what to do. When you work with me you can get your questions answered right away.

Second, if you make a mistake you probably won’t realise it right away. Mistakes can be costly…and you can waste a lot of time going in the wrong direction. 

Besides, my services don’t cost you anything! You might as well benefit from my experience and do it for free. 

The Smith Maneuver offers many benefits:

  • You can cut 7 to 10 years off of your mortgage without increasing your monthly payments.
  • You can save for retirement as you pay off your house.
  • It is an advanced technique used by the wealthy to turn a mortgage into a tax-efficient vehicle for building wealth. 

When you work with me to set up your Smith Maneuver mortgage I’ll get your mortgage restructured in as little as thirty days. I’ll also coach you on proper strategy implementation so you can maximise your tax refunds. 

I don’t even charge you a fee for this service or expert advice. The mortgage issuer pays me to help you, so you get a risk-free opportunity to run the numbers, ask your questions, and implement the strategy. 

Yet it is not the perfect strategy for everyone. It offers the most benefits to people who are in the higher marginal tax brackets. The higher your personal income taxes, the greater the benefits. 

It also works best for homeowners with a relatively high discretionary income; that is, money left over after you pay your taxes and necessities like food, utilities, and insurance. It is not a good strategy for people who live paycheck to paycheck or who are currently in a position of being forced to spend everything they earn. 

Nothing. There are no lender or broker fees, and I’m paid a commission from the lender which I’ll fully disclose. On request I’ll refer you to accountants and/or financial advisors, but I don’t receive a referral fee for those introductions.

You get the same interest rate (or often better) as you would at the branch. Very few mortgage professionals are versed in setting up the Smith Maneuver, so you get to benefit from my professional experience.

Whenever you make a mortgage payment, a portion goes to interest and the rest goes to principal. With a readvanceable mortgage, that principal amount immediately becomes available on your home equity line of credit (HELOC).

Mortgage interest is not tax deductible on a primary residence, but it is on an investment. The Smith Maneuver is a debt conversion strategy to make the interest on your primary residence deductible.

Any investment comes with risk. As with any investment strategy, there is a chance that you may lose money on your chosen portfolio. It’s important to choose long-term investment vehicles and to have realistic expectations for what those vehicles will do.

That said, you should talk to an investment professional for advice on how to manage your portfolio risk. I’m a mortgage broker so I can only give advice on the debt structuring side of the Smith Maneuver. You’ll need to speak with investment and accounting professionals to round out your strategy.