The Smith Maneuver Tax Deductible Mortgage, Completely Done for You
- Automatically convert your mortgage interest into tax deductible interest
- No additional monthly mortgage payment or cost on your part
- Saves homeowners over $300,000 on average
Brent Richardson, Certified Financial Planner (CFP) and Mortgage Broker specializes in the Smith Maneuver, facilitating all aspects of the approval, implementation, and long term management, so you can benefit with ease.
Brent Richardson, CFP, Mortgage Broker/ Owner Altrua Financial Inc.
What is the Smith Maneuver tax deductible mortgage?
The Smith maneuver is a legal, time tested mortgage strategy that has helped thousands of Canadians build equity faster, pay off their mortgage and retire sooner.
How Does it Work?
It’s based on a Big Bank mortgage/Home Equity Line of Credit (HELOC), readvanceable all-in-one product. As the mortgage is paid down over its normal amortization (ex.10,15, 25 or 30 years), the HELOC borrowing limit increases on a monthly basis.
Each month the HELOC limit increases, the HELOC is automatically borrowed from and automatically invested into the financial markets.
Because you’re investing the borrowed HELOC funds, you can write off/ deduct the HELOC interest cost from your income taxes. In Canada you can legally deduct borrowing costs linked to income producing investments.
(2 – min explainer video)
Why get the Smith Maneuver?
Over time, your regular mortgage is paid down, and your tax deductible HELOC and investment pool grows.
Income tax refunds, from your deducted HELOC interest can be used to pre pay the main mortgage faster, and perpetuate the conversion process, saving years off your mortgage.
It has been shown over 50 years that market index average returns (ex. TSX and S&P 500 indexes) are higher than the tax deductible cost of borrowing over time. So the result is additional gains or a ‘profit’ spread for you – over $300,000 on average all with no additional mortgage payment or costs to you.
At Altrua we do all the ‘heavy lifting’ for you to implement and manage the Smith Maneuver with minimal time and effort.
The ‘Done for You’ Smith Maneuver Includes
- Recommendation of the best HELOC mortgage product with the best mortgage rates and features
- Implementation of the mortgage and account setup
- Recommendation for diversified, low cost and tax efficient investment solution
- Complete bookkeeping and precision income tax filing by a qualified Accountant (optional)
- A comprehensive, personalized Financial Plan from a CFP to show you how the Smith Maneuver fits into your big-picture retirement planning and other top goals (optional)
- Unlimited long term availability for questions and changes as needed
FAQ’s
Altrua Financial Questions:
How long does it take to impliment?
Implementation involves minimal time on your end. Approximately 2 hours to set up, depending on your questions. On an annual basis, it takes another 1-2 hours of your time. Altrua Financial will help with all the 'heavy lifting' involved and work with you for the best results.
What is needed from me?
The same information you would provide to any Bank or Mortgage Broker. Income, asset, credit/liability, and property information are all required to approve the mortgage.
We ask additional questions to help plan the Smith Maneuver and position within your Financial Plan.
What qualifies Altrua Financial to do this?
As Certified Financial Planners and Mortgage Brokers, we are uniquely positioned to help you implement and manage the Smith Maneuver long term. We have worked with 2000+ clients over the past 16+ years with a comprehensive understanding of mortgage, income tax, investment and how they affect each other.
What fees does Altrua Financial charge?
We do not charge any out of pocket or up-front fees as our lender and portfolio management partners compensate us.
What if I'm a self directed/ DIY investor?
We empower all types of clientele to select their best approach, including self directed investors. We advocate for simple, low cost investment solutions such as index based portfolios. We are happy to work with you and add value, where and as needed.
Does Altrua Financial invest my money?
No. Altrua Financial nor its representatives are licensed investment advisors. We are independent Certified Financial Planners (CFP) and licensed Mortgage Brokers. We offer a range of investment options including ‘do it your self’/ DIY investing, working with an existing investment advisor, or a partnership with the largest investment manager in Canada.
Smith Maneuver Questions:
What are the risks?
Over time, financial markets and interest rates will fluctuate, sometimes in a volatile manner, and if the investor is not comfortable with these market swings or would be inclined to sell during market declines, the Smith Maneuver would not be a suitable financial strategy for this investor type. The Smith Maneuver relies on long term commitment and financial market returns.
Who is it for?
The Smith Maneuver is best suited for those with a higher tolerance for risk, who can weather market fluctuations, and who are comfortable with committing to a longer term time frame to realize maximum benefits.
What if the market crashes?
The Smith Maneuver converts taxable interest into tax deductible interest over time, and in doing so promotes investing over time or ‘averaging in’ to the market. This positions you to take advantage of market dips when they happen by buying in at lower prices. While also experiencing gains in bull markets.
How do I collapse it at the end?
There are a number of strategies that can be planned in order to realize potential gains from the Smith Maneuver, and it really depends on the individual situation. One strategy may involve purchasing RRSPs with the investment sale proceeds. Others can involve a slower collapse to maximize tax efficiency. Connect with Altrua Financial to help determine your best strategy.
What if there is a change in my circumstances later on?
If there is a change in real estate or a need for capital sooner, the Smith Maneuver strategy can be arranged to allow for earlier access to investment funds (like an emergency fund), port/transfer of the mortgage to a new home, or collapse of the strategy, if required. Although long term commitment is encouraged for maximum benefit, the strategy is flexible and adaptable to changes to your situation.
Does this work for DIY investors?
Yes, absolutely. We can work with any investment approach, including do-it-yourself investing. As added benefits, you receive an optional comprehensive financial plan, expertise in implementation/setup and ongoing partnership with a dedicated Certified Financial Planner.
Disclaimer: Past performance does not guarantee future results. The information in this report is for education and illustrative purposes only, and is not intended to be used as, or construed as investment advice. Seek the advice of a licensed investment processional before investing.