Leveraged investing - which spouse?
My wife and I have a remaining mortgage balance of 42% of property value, and a HELOC for 33% of property value (currently with zero balance). Currently all our savings are in registered accounts using ETFs (Couch Potato) - RRSPs and TFSAs maxed out, and RESP grant-eligible contributions maxed out as well.
Don't have much cash flow left for non-registered investements, but was considering doing leveraging the HELOC with a monthly investment into a non-registered Couch Potato portfolio. The HELOC is joint, and the non-registered account with be joint with survivorship as well.
However, from reading online, I understand that I can make a decision at the beginning as to which spouse (or what percentage) will claim the interest deduction and investment gains. Once I make the decision, I understand that I have to stay consistent. The only thing I'd have to justify is that the relevant spouse is servicing the interest payments with their own money. The Q is, what spouse should be claiming this?
My wife is currently on extended maternity leave with zero income, expected to be back at work late next year. I expect that my income will likely be higher than hers in future years, and she has a DBPP which will reduce her taxable income even further.
The interest deduction would be more useful to me, but the gains would be better taxed in her hands, while the eventual liquidation of the portfolio would be better in my hands (as she would be receiving her DBPP payments). Any ideas?
Don't have much cash flow left for non-registered investements, but was considering doing leveraging the HELOC with a monthly investment into a non-registered Couch Potato portfolio. The HELOC is joint, and the non-registered account with be joint with survivorship as well.
However, from reading online, I understand that I can make a decision at the beginning as to which spouse (or what percentage) will claim the interest deduction and investment gains. Once I make the decision, I understand that I have to stay consistent. The only thing I'd have to justify is that the relevant spouse is servicing the interest payments with their own money. The Q is, what spouse should be claiming this?
My wife is currently on extended maternity leave with zero income, expected to be back at work late next year. I expect that my income will likely be higher than hers in future years, and she has a DBPP which will reduce her taxable income even further.
The interest deduction would be more useful to me, but the gains would be better taxed in her hands, while the eventual liquidation of the portfolio would be better in my hands (as she would be receiving her DBPP payments). Any ideas?
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