MemberIs anyone doing the Smith Manoeuvre?
Why is manoeuvre so difficult to spell? lol
I’m intrigued by the idea, but don’t know if I could stomach it.
Has it been worthwhile so far? Do you have a high mental risk tolerance or were you just able to examine it logically?
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Member@ greeneidlady- I think it’s a mortgage strategy but I’m not sure!
MemberA quick Google search confirms that it’s a mortgage strategy for Canadians. So…doesn’t apply to us in the US.
Member@Mrs.Camera: Ahh, okay, I was too lazy to look it up, lol. Thank you clarifying.
Member@Mrs.Camera: Thanks!
@greenidlady: It’s a way to leverage using the mortgage while making the mortgage interest tax-deductible.
Member@AB Bride: Yeah. And since in the US our mortgage interest is already tax deductable, it doesn’t apply.
It sounds like a neat idea, but I’d probably talk to a financial advisor and get some details before making a decision. Good luck!
MemberMemberWe’ve done this. We worked with a financial advisor to make sure everything was set up properly so we’re not worried at all.
Essentially my Darling Husband had to sell all of his investments before we purchased our home. We then set up 2 different accounts against our home – a small amortizing mortgage and a line of credit. When we closed on the house we drew on the mortgage and the balance was paid with the cash. A few days after the closing my Darling Husband then reinvested by withdrawing against the secured line of credit. That way we can easily show the cash withdrawal against the LOC supports the investment purchases making the interest on that loan eligible for a tax deduction since it was used to generate investment income.
I hope this helps.
Member@RunningGal: Thanks!
Do you ever worry about interest rates? Logically, I like this idea, but I’m also not someone who typically goes for the riskier option.
How long have you been doing it and so far have you done better than if you just paid off a mortgage?
Sorry if anything is too personal, feel free to ignore anything you’re not comfortable answering.
Member@AB Bride: We’re happy with the financial arrangement. Darling Husband works in finance and loves to invest so we figure we would’ve just reduced our downpayment if we didn’t go this route since he loves trading stocks. We ‘re definitely “ahead” because we get the deduction for the interest on the LOC which we wouldn’t have received otherwise. We got really good rates on both products so that definitely wasn’t a concern for us.
Member@RunningGal: Thanks! I’m glad it’s working out so well for you!
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