The Smith Manoeuvre – Toronto Star
March 24, 2008
The pitch sounds very seductive. “Go ahead. Make your mortgage tax deductible. Yes. It can be done. Yes it’s legal.”
The pitch is used to promote an investment technique called the Smith Manoeuvre.
According to Smith Manoeuvre Financial Corporation (smfc.com), “the Smith Manoeuvre is a financial strategy that simultaneously converts mortgage interest to tax deductions, shortens the amortization of your mortgage and builds a free and clear pension portfolio for your retirement – funded through your monthly mortgage payments and without requiring any additional monthly cash investment!”
The investment strategy is explained in a book called The Smith Manoeuvre: Is Your Mortgage Tax Deductible? by Canadian financial guru Fraser Smith (Outspan Publishing, $24.95).
But it may not be quite as rosy as it sounds.
Writing in the March issue of REM (Real Estate Magazine, remonline.com), a monthly publication for industry stakeholders, tax specialist Dan White sounds an alarm about using the strategy.
In providing a glimpse of the “dark side of the Smith Manoeuvre,” he cautions anyone contemplating using the technique to “think again and think carefully.”
Here’s how the program works: The homeowner obtains what the Smith people call a re-advanceable mortgage –which is basically a mortgage combined with a line of credit, where the balance can fluctuate from time to time.
July 4, 2008 at 3:55 pm
[...] investments and taxes work together to help you achieve your goals. Often referred to as The Smith Maneuvre (after the Canadian Financial planner who developed it), this holistic approach to finances lets [...]