Investing

Best way to leverage equity in rental house for investment

  • Last Updated:
  • Aug 16th, 2021 2:58 pm
[OP]
Member
Feb 11, 2009
385 posts
130 upvotes

Best way to leverage equity in rental house for investment

My mortgage renewal is coming up in a few months for my first rental property. I would be able to access approximately 225-250k in equity at renewal.

I'm wondering what is the smartest use of that equity going forward? I do not plan on acquiring new buildings so I'm looking mostly at investing in the stock market. My TFSA and RRSP are not yet maxed but from what I understand, I should be using my own income to fill those accounts and use the equity in a non-registered so that I can continue to deduct interest.

Anyone in a similar position and willing to share some of their strategy?

Thanks
2 replies
Sr. Member
Dec 13, 2010
850 posts
1308 upvotes
Vancouver
Even though you cannot deduct the loan interest if you invest in your TFSA - it could still be worth doing. The tax-free gains inside the TFSA are likely to do better than your low mortgage interest rate, over the long-term.

You could then utilize the remaining portion of the loan to invest in your taxable account; definitely check out the link that @treva84 posted above.

You may end up having more complications come tax time though - as you would only be able to deduct the portion of the interest related to the non-registered investing (which includes your rental property). So from a simplicity standpoint, you may want to separate out the borrowing for the TFSA, if you go that route; or use your own cashflow, if you can max it out soon that way.

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