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Why can’t I deduct mortgage interest?
– moneysense.ca
Q: Why is the mortgage interest on a home or condo not deductible when it’s our principal residence?— Brendan A., St. Albert, Alta.
Answer from Steve Garganis, mortgage broker and editor of CanadaMortgageNews.ca:
In the United States, homeowners can deduct the mortgage interest from their personal income as a tax deductible expense. Sounds great, but keep in mind they also have to pay capital gains tax on any profit they made if the home increased in value. For instance, if they bought for US$200,000 and sold for US$500,000, that U.S. citizen would have to pay capital gains tax on the US$300,000 profit. That could be quite a tax bill.
In Canada, we have the benefit of being able to sell our principal residence and keep all the profit, tax free. On the flipside, we aren’t able to claim the mortgage interest as a tax deductible expense. But this only applies to your principal residence.
On an investment property, you are allowed to claim the mortgage interest as a tax deductible expense…
Pay down your mortgage faster to save in interest
– moneysense.ca
But paying a few extra dollars every two weeks instead of the usual monthly payment or making an extra lump sum payment once a year can also save borrowers thousands in interest and shorten the time it takes to pay off a mortgage by years.
How mortgage payments work »
Wade Stayzer of Meridian Credit Union says homeowners need to understand of how much they can afford to pay and work from there.
“You really need to understand your personal financial situation and what it is you’re trying to accomplish,” said Stayzer, Meridian’s vice-president of sales and service.
The rules governing how much borrowers can increase payments or put down in a lump sum vary depending on the mortgage contract, so it’s important to read the fine print.
For those looking to pay off a mortgage faster and can afford it, Stayzer recommends increasing regular payments over saving up and making an annual lump sum payment…
