Personal Finance

Mortgage Interest , Rates,and taxes

  • Last Updated:
  • Jul 14th, 2020 5:31 pm
[OP]
Deal Addict
Aug 28, 2010
1275 posts
329 upvotes
Toronto

Mortgage Interest , Rates,and taxes

Hi All. I am in a weird spot. My principal residence 5 year term is coming to an end and can renew at 2.09-2.20% 5 year fixed and can borrow equity out of the property to use however i see fit.

I have a rental property @ 2.7% 5 year fixed which i write-off the mortgage interest. Does it make sense to renew and take out an extra i.e $100k from primary residence and do a lump sum payment (within my 15% allowance per calendar year) to pay off the higher interest rate?

I dont really know how to factor in "savings" from write-off and if this is worth doing?
2 replies
Deal Addict
Jun 26, 2019
1956 posts
1689 upvotes
GTA
It probably does not.

You can reduce the interest rate you pay on your rental property proportional to your marginal tax rate. Do that math and then figure it out if its worth it or not. Assuming you are in a higher tax bracket and reporting an income on the property, it's probably not worth the hassle.
Deal Fanatic
Dec 16, 2005
6248 posts
4345 upvotes
don't.

the mortgage interest is a write off on the rental. put the money in a TFSA or RRSP is the best option.

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