A colleague I’ll call Andy came up against a curious barrier to deducting mortgage interest on a rental property. Canada Revenue Agency (CRA) likes to see a straight line between the mortgage lump sum and the purchase of the property that will generate rental income. Unfortunately, it seems that Andy cannot easily draw a line that would satisfy CRA. Andy owns a small home free and clear. He plans to move to a new larger home soon. He had hoped to rent out his old home to make some rental income. His plan had been to take out a mortgage on the old home and use this money to reduce the size of the mortgage on his new home. A side benefit Andy hoped for was using the interest on the mortgage on the old house once it becomes a rental property as a deduction against the rental income. Unfortunately, CRA won’t allow this. From CRA’s point of view, the borrowed money wouldn’t be used to purchase an investment, but would be used to buy Andy’s new home. The following Q and A on page...
I view this year as a year where I got to buy lots of bargains from my Dividend Reinvestments and a year where I finally won a few pool games, so not that bad a year too!
ReplyDeleteHOPPY NUDES YARD!
'Stocks will rebound in a big way in 2009' Michael James on Money.
ReplyDeleteI am holding your to that prediction and I will be angry at you if it does not come to fruition :)
Happy New Year, I enjoyed your blog in 2008, keep it up!