What every American should know before buying a home in Canada + MORE Jul 24th

Buying a home is one of life’s biggest financial decisions, but it’s also one of the easiest places to make an expensive cross-border tax mistake. For many families, purchasing a home represents stability, permanence, and the feeling of finally putting down roots. For U.S. citizens living in Canada, buying a Canadian home can create tax consequences that don’t become apparent until years or even decades later.

A case study: When the principal residence exemption isn’t enough

Take London and Ava. London grew up in St. Louis before accepting a management position with a Canadian technology company in Vancouver. There, he met Ava, a Canadian elementary school teacher. After getting married, they purchased what they hoped would be their forever home—a detached house in Toronto for $850,000 CAD.

Over the next 20 years, they renovated the kitchen, finished the basement, watched their two children grow up, and built a life around their neighbourhood. By the time they retired, the house was worth $2 million…

For most Canadians, a mortgage is simply a fact of life. You buy a home, make your monthly payments, and hope to have it paid off by the time you retire. It’s the advice many of us grew up with: work hard, eliminate debt, and then start enjoying financial freedom.

But what if there was a way to make your mortgage work harder for you while you’re paying it down? That’s the idea behind the Smith Manoeuvre, a strategy that helps homeowners use their home equity to potentially build investments and improve tax efficiency at the same time.

Looking at debt differently

For many people, debt is something to avoid at all costs. And when it comes to high-interest consumer debt, that’s generally good advice. But not all debt is created equal.

Some debt is used to buy things that lose value over time, like vehicles, vacations, or consumer purchases. Other debt can be used to acquire assets that have the potential to generate income and grow in value.

The Smith Manoeuvre is built on this distinction…

Here’s a round-up of news for Canadian investors this week.

Rogers

Teck

Scotiabank

Sleep Country

Featured RRSP Accounts

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EQ Bank

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Registered GIC rate

Earn a guaranteed 2.75% in your RRSP when you lock in for 1 year.

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Best RRSP rates

See our ranking of the best RRSP accounts and rates available in Canada.

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MoneySense is an award-winning magazine, helping Canadians navigate money matters since 1999. Our editorial team of trained journalists works closely with leading personal finance experts in Canada…