Obtaining a mortgage or secured line of credit in Canada at the best rates is often a daunting task. We can help! Read the articles below for more info.
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Should you borrow to pay expenses on an investment property?
– moneysense.ca
Q. I have an investment property that I rent out. Now that I’m retired, I would like to use the income to supplement my retirement income. That would leave me with no money to pay the expenses on the property (mortgage payment, maintenance, utilities, etc.).
I’m wondering two things: One, can I borrow all my expenses from my personal home equity line of credit (HELOC), thereby making all of the expenses and interest tax deductible?
And, two, looking into the future, let’s say I have now done this for two years and the expenses are $20,000 per year. I now have a debt of $40,000 in my LOC. The interest costs are now double they were in year 1. Is all of that interest tax-deductible for year 2, or only the interest for year 2 expenses?
–Garry
A. Many rental property owners end up in a similar situation as you in retirement, Garry—that is, a point at which you need to access some of the value of your rental property, one way or another.
If you literally have no money to pay the expenses, as in no remaining investments to draw down upon, I think you need to consider if and when to sell the rental property…
I’m wondering two things: One, can I borrow all my expenses from my personal home equity line of credit (HELOC), thereby making all of the expenses and interest tax deductible?
And, two, looking into the future, let’s say I have now done this for two years and the expenses are $20,000 per year. I now have a debt of $40,000 in my LOC. The interest costs are now double they were in year 1. Is all of that interest tax-deductible for year 2, or only the interest for year 2 expenses?
–Garry
A. Many rental property owners end up in a similar situation as you in retirement, Garry—that is, a point at which you need to access some of the value of your rental property, one way or another.
If you literally have no money to pay the expenses, as in no remaining investments to draw down upon, I think you need to consider if and when to sell the rental property…
