FormerXBC Inc XEBEQ

One last thing about margin

[tamaracktop]

I have dealt with many people who had portfolios bigger than their mortgages, or not even bigger. This is a conundrum because mortgage interest is not tax deductible. In some, if not many, cases these people can essentially make their mortgage interest tax deductible by selling shares, paying down or even paying their mortgage off completely, and then borrowing against their home to rebuild their portfolios. Voila, the interest they pay is now a tax deductible carrying charge, It's very simple, and very true. In some cases , this can save people thousands annually .
    This should only be done in consultation with a qualified tax adviser.

[tamaracktop]

The reason it becomes tax deductible is that any interest paid on a loan used to invest in a Canadian company is tax deductible. It has been as long as I can recall. It's an incentive for individual Canadians to invest in Canada.

[tamaracktop]

Interest paid on money borrowed to buy your house is not deductible. If you borrow against your house to buy Xebec, or Greenlane, or Exro, or Royal Bank, or CP, or Pyrogenesis, your interest is fully and unquestionably tax deductible.

[tamaracktop]

Tomorrow we'll talk about how to do substitutions between registered and non registered accounts for either shares or cash with no tax consequences.

[Canadian_101]

I would be very careful here, depends on your income level you at at..... from the tax lawyers I have talked to, when you transfer money from a registered account or do an  in kind transfer of shares ( you do not sell the shares, you transfer them in kind) from a registered account ( RRSP), not aTFSA, this as considered a withdrawal and the amount is always taxable at the tax bracket your in.

[newcoin]

This is my understanding as well. I've always considered withdrawls 'in kind' from an RRSP to be taxable. No way around it.

[Canadian_101]

I would caution one before they borrow to invest in Canada, the fact is and correct me if I am wrong but Zebec, Green, Pyr do not pay dividends and as far as I know they have not stated that they intend to pay dividends ( I may be wrong on this).As for the Royal Bank that would be deductible. The biggest criteria that the CRA use's to determine if interest is deductible is if the investment is

[newcoin]

I've had a margin account for several decades. I've considered the interest expense deductible all along. Rev Can has never questioned it once. Most of my stocks don't produce dividends. Don't worry, be happy!!

[Canadian_101]

Have you been audited yet??

[newcoin]

Legally, I agree with you. Practically, Rev Can doesn't enforce, except in rare situations. Have you ever had a problem, in this area, with Rev Can?

[tamaracktop]

That is completely fake news. Interest is 100% tax deductible on money that is invested in any Canadian company with a reasonable expectation of becoming profitable in the future. The CRA will never disallow the deduction of margin interest. Ever.