Purchasing Invesment Property - Use CASH or HELOC?

[240sxer]

I have a mortgage on my current home as well as some cash saved up for investing. I quickly spoke to a financial advisor who suggested that instead of paying cash for the investment property, to dump the cash into my mortgage (or even a petty little TFSA earning 2.5%) and invest using HELOC from my home equity so that its tax writable.

I know they call it the smith manouver, but how does it work in laymens terms when compairing it to paying for an investment property in CASH instead of smith manouver?

[ksgill]

I have a mortgage on my current home as well as some cash saved up for investing. I quickly spoke to a financial advisor who suggested that instead of paying cash for the investment property, to dump the cash into my mortgage (or even a petty little TFSA earning 2.5%) and invest using HELOC from my home equity so that its tax writable.

I know they call it the smith manouver, but how does it work in laymens terms when compairing it to paying for an investment property in CASH instead of smith manouver?

You get tax credits on the INTEREST only for the money you take out of HELOC to invest. Two questions:

1) If you have money owing on your mortgage, do you think it is a good idea to take more money and invest in a property? It is a lot of work and usually not as profitable as people think.
2) Have you done the math including repairs, property tax, possible depretiation that is in the works in the next year or two?

http://www.torontolife.com/daily/inf...ousing-bubble/

If the answer is yes, go ahead and get this new property. Good luck.