Smith Manoeuvre Calculator
Convert your non-deductible mortgage interest into tax-deductible investment debt. Build an investment portfolio while paying off your home — the Canadian way to create wealth.
Want the full breakdown first? Read the guide:
What Is the Smith Maneuver (Manoeuvre)? A Beginner's Guide for CanadiansTotal return including capital gains and dividends. TSX historical avg ~8-10%.
Canadian eligible dividends receive preferential tax treatment.
Apply refund as extra mortgage payment, then re-borrow to invest
Every $1 of deductible interest saves you 0¢ in tax.
$0
After 25 years
$0
Tax-deductible debt
$0
Portfolio minus HELOC
$0
$0 / year
Pay Mortgage Normally
Each payment reduces your principal, freeing up room on your readvanceable mortgage.
Re-Borrow via HELOC
Immediately borrow back the principal portion from your HELOC.
Invest the Proceeds
Invest in Canadian dividend-paying stocks or eligible funds to grow wealth.
Deduct Interest
HELOC interest is now tax-deductible since the borrowed funds are used for investment.
| Year | Standard | Smith Manoeuvre | |||||
|---|---|---|---|---|---|---|---|
| Mortgage Bal. | Interest | Mortgage Bal. | HELOC Bal. | Investments | Tax Savings | Net Worth Δ | |
| Total | $0 | $0 | +$0 | +$0 | |||
Smith Manoeuvre
- Re-borrow to invest in stocks/funds
- Works for anyone with a readvanceable mortgage
- Builds an investment portfolio over time
- Interest deductible because funds used for investing
- Higher growth potential, more market risk
Cash Damming
- Re-borrow to pay business expenses
- Requires self-employment or business income
- No investment portfolio — redirects cash flow
- Interest deductible because funds used for business
- Lower risk, simpler to implement
Readvanceable Mortgage Required
You need a readvanceable mortgage (e.g., Manulife One, Scotia STEP, TD Home Equity FlexLine) that automatically frees up HELOC room as you pay down principal.
Investment Must Produce Income
CRA requires borrowed funds be invested with a reasonable expectation of earning income (dividends or interest). Capital gains alone may not qualify.
Market Risk
Investment returns are not guaranteed. In a downturn, you may owe more on your HELOC than your investments are worth. Time horizon is critical.
Keep Accounts Separate
Maintain a dedicated HELOC sub-account for Smith Manoeuvre borrowing. Never mix personal and investment borrowing to ensure deductibility.
Consult a Professional
Work with a tax accountant and financial advisor experienced in the Smith Manoeuvre before implementing this strategy.
Long-Term Commitment
The Smith Manoeuvre works best over long time horizons (15–25+ years). Short-term implementations may not overcome HELOC interest costs.
Not Financial Advice. This calculator is provided for educational and illustrative purposes only. It does not constitute financial, investment, tax, or legal advice. Results are based on simplified models and assumptions that may not reflect your actual financial situation.
No Liability. The creators and operators of this tool accept no responsibility or liability for any loss, damage, or financial consequence arising from the use of or reliance on the information or calculations provided.
Accuracy Not Guaranteed. Tax brackets, benefit thresholds, and other constants are estimates based on publicly available data and may not reflect the most current values. Calculations involve simplifications and may differ from actual CRA assessments.
Canadian Jurisdiction. All tax rules, benefit programs, and financial regulations referenced are specific to Canada. This tool is not applicable to other jurisdictions.
Always consult a qualified financial advisor, tax professional, or legal counsel before making any financial decisions based on these calculations.
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