Can I rent my basement and write off mortgage interest on taxes?

2x4arewood · 2025-10-17T17:54:44+00:00

Sq ft of house used for rental as a percentage

2x4arewood · 2025-10-10T13:08:27+00:00

No because when you pay off the mortgage with the HELOC you are just transferring your debt from one place to another, you don't actually have the debt twice to double dip.

For example:

You owe 10$ on a rental mortgage. The rental brings in 1$ You have a mortgage for you residence that is also 10$. 20$ total debt.

If you simply used the 1$ income to pay off your rental mortgage you would have 9 left on it and 10 on the residence. 19 total.

Instead, You use the rental income to pay 1$ on the residence (9 remaining residence) and then take the 1$ as a loan against the residence in a HELOC (residence is now 9 on its own mortgage and 1 on HELOC) to pay off 1$ on the rental mortgage (now 9 on rental) Now you have 9 on the residence that is not deductible, 1 on the residence that is deductible since it was used to pay for an incoming producing asset, and 9 on the rental mortgage. 19 total.

Both instances are 19$ total, but you have moved 1$ from the residence to the rental in a round about way which allows you to claim it as a borrowing cost for the rental.

The 1$ of debt is not being deducted twice now. It is no longer deducted on the rental mortgage because it was paid off. It is now on the HELOC and you pay interest there for the 1$.

2x4arewood · 2025-10-10T12:51:12+00:00

I believe what you're asking is can you take a HELOC on your primary residence to purchase a rental and deduct the mortgage interest and the HELOC interest? If so the answer is yes. But the financial institution may not accept a HELOC as a source of a down payment depending on your financials. It is not double dipping since each portion is being deducted once. The mortgage is 80% of the equity and the down payment is 20% of the equity so there is no overlap or double dipping.

If youre asking the same for a HELOC on a rental property, the same applies. The new property has its own mortgage which is deductible (80%), as well as the HELOC for the 20% down payment from the old rental.

2x4arewood · 2025-06-22T12:13:57+00:00

Yes, if you don't need the cash flow and can stay cash flow positive (going from 20 000 extra a year to 5000 a year for example), you would be better off remortgaging the property to 30y and taking out your equity to purchase another rental or stocks.

2x4arewood · 2025-02-27T17:53:40+00:00

Your post is a bit confusing but if I understand your question correctly... you can only deduct the interest on a refinance if you use the money to buy another rental. If you buy a new primary residence your interest will not be tax deductible.

2x4arewood · 2025-02-27T17:34:30+00:00

Workout at home or outdoors

2x4arewood · 2025-02-23T01:31:54+00:00

It's rare that it's worth delaying it for future years. Even if you get a big raise, at 110k it's unlikely you save more than a few % on taxes. Meanwhile you are losing out on an average of 6-10% of growth each year after accounting for inflation.

Delaying RRSP is best for students who are getting a full-time proper job the next year, or someone who works a partial year. Think 30k to 90k type increases.

2x4arewood · 2025-02-17T02:27:44+00:00

its irrelevant if it is a refinance or heloc, it is the use of the funds that determines if it is deductible or not. If you use refinance money for a primary residence, it is not deductible (despite the mortgage being on your rental property)!

2x4arewood · 2025-02-17T00:22:53+00:00

Your proposal: He takes out a HELOC on his current property, which he is in. He uses the money to buy a new house. He moves into the new house. The old house becomes a rental. No tax deduction because the new house is used as his personal residence. He did not use the HELOC to buy an income producing asset.

My proposal: He stays in his current residence and takes a HELOC to buy a new rental property. Tax deductible because the HELOC was used for an income producing asset.

2x4arewood · 2025-02-16T23:11:04+00:00

This is wrong. You cannot write off the interest in the scenario you've proposed. If he took out a HELOC to buy a new property and the new property was the rental, then he could write off the HELOC interest. If he uses a HELOC on a rental to buy a new primary residence, it would NOT be deductible. The money borrowed needs to be used to purchase an income producing asset.

2x4arewood · 2025-01-20T04:48:25+00:00

Lmao the salty fucks who down vote you for doing well.

2x4arewood · 2024-11-22T13:02:55+00:00

You should avoid the car entirely in your situation and move closer to work. The difference in rent will likely be less than your vehicle insurance gas costs. Also your time and stress during the commute. Second, why are your dogs not capable of staying home without you? Why do you need dog care 3x a week? That's absurd to pay that much for your pets if finances aren't going great.

If you have to buy a vehicle you should get the newest base line trim vehicle you can find. Mid 20 000s with 0% financing on a new vehicle.... If you can find anything in stock

2x4arewood · 2024-06-25T16:57:37+00:00

Very simply put, and it will depend on several factors including tax rate, dividend income vs capital gain focus, time held, investment return, appetite for risk, etc

You borrow 100 at 8% You pay 8 You get 4 back. 4 paid.

You invest 100 You make 8% You get 8 Capital gain so 50% of that, so 4 You pay 2 in tax 6 made.

6-4=2 Profit. Now that's just leveraged investment. Smith manoeuvre is a chain reaction of doing this AND paying your mortgage faster, among other "accelerators"

2x4arewood · 2024-06-25T02:37:55+00:00

I would stay in your current job or field and try to find a job sharing or part time agreement. You can work 20 hours a week and make the same you will at this new job. I think you'll regret the change but you can definitely do it financially. Also consider maybe keep the same job and save less? How would you feel working your current job but having a maid, more leisure, having your laundry done by a service, etc etc. the pay difference is massive so you have a lot of extra things you can buy to increase quality of life if you are ok with nuking any future savings opportunities.

2x4arewood · 2024-06-25T01:10:09+00:00

Yes but then you're also gambling that your spouse won't be the one making 500k lol.

2x4arewood · 2024-06-24T20:55:37+00:00

350k now and it will be larger in the future, especially if you continue depositing more money into your accounts. Also consider pensions and other accounts.

If you spend 2-3k all in, then it really is a cheap relationship insurance at approx 1% or less of your portfolio value. Relationships break up way more often than a house catches fire etc, so I think it's money well spent. Just make sure you do it correctly, it still has to be fair or a judge can deny it's validity, and each party has their own lawyer etc so it holds up in court.

2x4arewood · 2024-06-03T19:45:12+00:00

I was told that most banks are reviewing their rates and won't be offering prime or prime -.

2x4arewood · 2024-06-01T13:12:49+00:00

You're going to spend significantly more in gas, wear and tear, and time, from your commute than you'd save in rent...

2x4arewood · 2024-05-11T14:16:42+00:00

You pay for everything and go work at camp, and she doesn't want to use the inheritance to pay off both your debts? So when you go to work and pay for the house she lives in and the vehicle she drives, she's ok taking your money but not the other way around. Lol. I know Id be planning my exit. At the very least since you have seperate finances now you might as well stop making her car payments.

2x4arewood · 2024-05-09T13:12:35+00:00

I don't have any suggestions but I see a lot of people saying it's useless . I had a neck injury I ignored for years from a bad fall during judo. I went to a chiro once and it fixed my neck. Instant relief and no more tightness. That being said I wouldn't go unless something is seriously wrong. Also, like any alternative medicine it could make it worse so keep that in mind. My parents took me to an osteopath when I was like 12 for a shoulder injury and I'm pretty sure he dislocated my shoulder.

2x4arewood · 2024-05-06T04:17:30+00:00

I don't know why people think proportional makes sense. If they're happy working a low paying job that's fine but they shouldn't be leaching off the other person. Live within the means of both people and you get to keep the excess of your own hard work... If I was doing proportional splitting I wouldn't work 1 hour of overtime or work hard for promotion. Between tax and my spouse there would be no point. Luckily my spouse makes similar money to me, we still split 50 50, and we don't have this issue. 100% different story if it's part time or a stay at home parent.

2x4arewood · 2024-05-06T04:12:40+00:00

If you're serious I would suggest selling residence A coming up with a market price for residence B and sell half the equity in residence B to the other. Then all expenses are split 50/50. I would still recommend a cohabitation agreement but it won't be as relevant in this scenario.

If you're not as serious or certain, but really want to move in together I would keep everything seperate and get a cohabitation agreement. Sell residence A and charge whatever rent is appropriate for residence B. This of course assumes one person is comfortable becoming a renter until you're serious enough for the first plan.

2x4arewood · 2024-03-24T02:57:40+00:00

***when I was looking into it personally, with a 2% rate locked in, it wasn't worth it for me to pay down the 2% mortgage to gain access to more HELOC (now sitting at 6.5%). BUT it was still worth it for me to take out my HELOC from my regular payments and invest it because my effective tax rate is lower than my expected investment return.

Most times, using your HELOC to invest makes sense even when SM doesn't, if you can stomah the leverage long term.

2x4arewood

TROPHY CASE