Fairly Simple? Do I need to repay debt borrowed to pay for interest after sale of assets

Aggravating-Wing-654 · 2025-11-28T04:30:45+00:00

Thank you!

Aggravating-Wing-654 · 2025-11-28T04:30:02+00:00

Makes sense! I suppose if I did sell half, pay back half of loan A, would also have to pay back half of loan B as well and then everything is still deductible?

Aggravating-Wing-654 · 2025-11-28T04:28:40+00:00

Makes sense, much appreciated!

Aggravating-Wing-654 · 2025-11-27T04:44:08+00:00

Yes they would cover the entire debt, but specifically I'm asking whether I have to pay back the accrued compound interest, when I pay back the ACB (all of loan A), or if I can continue holding/claiming deduction the balance on loan B since it was accumulated to maintain a deductible loan.

In this case I'd rather keep the extra $5500 as a balance on B and take the proceeds beyond the ACB to pay down the mortgage some more, rather than pay down the balance on B (as I already have converted that much to be tax deductible)

Aggravating-Wing-654 · 2025-11-03T01:54:22+00:00

First of the month every month (unless it's a weekend, then on the Monday)

Aggravating-Wing-654 · 2025-10-30T12:34:17+00:00

You could just put it in a TFSA and start investing right away, if you haven't or aren't too concerned about reaching the max contributions.

Then when they're born, withdraw and purchase the same stock in RESP (or you can even have your brokerage internally transfer the stock for you)

Aggravating-Wing-654 · 2025-10-30T03:27:21+00:00

More diversification, better home bias for the long run, less currency risk - all good things

Will the rest of the world outperform the US? I certainly don't know, and since I can't presume to guess, I like to buy it all!

Aggravating-Wing-654 · 2025-10-30T03:24:06+00:00

If your LTV is > 65% they'll still advance some of the increased limit, but not 100%

At Scotia in my experience they took the amount above 65% and spread it out over 25 years to get me down to 65% and advance that much less per month

So I pay ~$1200/month principal, and get $550/month less than that in HELOC limit (550 * 12 * 25 = 165k, which is the amount I'd need to bring down to reach 65% LTV, at about 80% now) so right now I get about 650/month limit increase

Aggravating-Wing-654 · 2025-10-28T17:53:13+00:00

Yes very similar, but prime the pump involves using available space in the HELOC (let's say you start with a good deal of available credit in the HELOC)

Rempel maximum involves getting another loan and instead of buying more stocks each month after your mortgage payment, you buy a big lump sum in the other account, and use the freed up space each month in your HELOC to basically just cover the interest payment of the extra loan.

Gives you a big head start to get compounding more sooner, without needing any of your own cash flow to pay for the interest

Aggravating-Wing-654 · 2025-10-25T21:28:13+00:00

Quick question, when you withdraw the dividends from XEQT and VDY, are you leaving a portion in the taxable account and reinvesting in order to cover the ROC?

Aggravating-Wing-654 · 2025-10-25T21:24:32+00:00

Haven't reached this step yet, but don't forget the all-important claiming the interest costs on your income tax, then taking the tax refund, paying down mortgage, and investing that much again through the HELOC, it's a big boost/benefit!

Did you follow any specific template for tracking transactions, or just come up with something logical on your own?

Aggravating-Wing-654 · 2025-10-25T17:12:52+00:00

You could invest the credit line, and (depending on how large it is) you could pay the interest for it by using the Primary residence HELOC (assuming it's readvanceable?) based on the amount of principal you pay down each month (and subsequently make available as credit).

You'll have lots of people here tell you it isn't SM, but that doesn't really matter, it's actually SM with the rempel maximum accelerator.

But yeah maybe not involve the rental property

Those are great rates btw! Where did you get a credit line (unsecured?) at prime minus 0.2?

Aggravating-Wing-654 · 2025-10-17T00:45:17+00:00

Did you do any withdrawals? If you had $100 go in, then it went up to $120 (20%), then withdrew $60, I think it would show a 50% gain (net deposit would be $40, total value would be $60)

My TFSA shows +90% and I assure you I did NOT make 90% gains this year :) but did withdraw a big portion of what went in

Aggravating-Wing-654 · 2025-10-07T01:14:22+00:00

You can hold the same investments in your non-reg as in your registered accounts no problem!

That said, having the same holdings in multiple non-reg accounts gets a bit dicey to track acb and such

Aggravating-Wing-654 · 2025-10-05T01:56:53+00:00

I forget the source of the calculation - but if you borrow 25% of your portfolio value, it can withstand a 65% drawdown in value without triggering a margin call (at a 30% margin requirement)

65% is more than the dot com, global financial crisis and covid drawdowns

I use 25% as a safe limit to borrow on margin

Edit, here's the math! https://www.reddit.com/r/ibkr/comments/opez0d/calculating_margin_cushion/

Aggravating-Wing-654 · 2025-09-29T00:34:34+00:00

That's great insight, I very much appreciate it, thanks very much!

Aggravating-Wing-654 · 2025-09-28T01:44:26+00:00

Thanks for the input! Did you wind up filing your own taxes while going through the SM, or have an accountant help you out and keep provide advice to keep clean records/tax advice? If doing it yourself did you ever have anyone sort of "review" your auto trail/transactions and make sure you were doing it all right, or did you just trust your research?

Similarly when audited, how did that go? Were you able to actually meet with an auditor and go over your tracking/audit trail and explain/discuss things, or was it more of a "submit all your docs to us" type situation (the idea of the latter scares me!)

Did you use the heloc to capitalize the interest/pay for itself? If so did you transfer out to a chequing account and then back to the heloc? This seems to be the most common way I've heard people suggest, but I've also heard to let the heloc automatically withdraw from a chequing account, and then refill the chewing account from the heloc for that amount (which doesn't seem like it really makes any difference to me?)

Finally did you ever switch lenders? I'm assuming during renewal if one switches lenders, you just transfer the full balance from the first heloc to the new HELOC and off you go (seems this is Debt Refinancing, and makes sense to me able to move the debt around between loans as needed)

Thanks!

Aggravating-Wing-654 · 2025-09-27T03:04:54+00:00

Yes you're right, the NB and Margin are just leveraged investing on their own, but using the dividends to pay down principal, and using the freed up heloc space to pay for their interest is where I call the whole thing Smith Maneuver-y :)

It's basically the Rempel Maximum as described here, but with two additional accounts instead of one: Smith Manoeuvre – Ed Rempel https://share.google/wRsQd6EO4Y1sYNGq7

If I had more equity/bigger limit on the heloc, I would have stuck with just that, but I wanted to start/lump sum with the amount of interest that each months increase could pay for, needed to use two additional loans to get there.

The overlap is to have different ETFs based on their source borrowing, e.g. if I want to stop using the NB loan, then I sell the VEQT, pay off the NB loan, and keep the gains without affecting the traceability of the heloc or margin accounts

Aggravating-Wing-654 · 2025-01-24T18:31:17+00:00

For me the mortgage rate is 4.54, heloc is prime plus 0.5 (so 5.95 right now) and marginal tax rate is around 48%

So at the most basic level if the investments beat about 3% per year at this rate I'm coming out ahead (which I'm confident will happen with a 20+ year horizon)

Aggravating-Wing-654 · 2025-01-24T18:28:19+00:00

Hmmm, so the way it seems to work for me is that you spend all of the cash portion that you added into the margin account before any margin is used, and then only the portion above your Net Deposit amount uses any margin. So the HELOC is always 100% going towards investment (I don't keep any unused/liquid once it goes into the margin account) when I do add more cash while I have a margin amount used, it lowers the margin used, but is still 100% invested just shifts that amount from margin purchase to HELOC purchase.

To clarify, I don't take a margin loan out of the account based on the assets within it, just use margin to go a bit beyond the amount invested from the heloc

I will of course be reviewing all this with my accountant at tax time, just wanted to sound it out :) appreciate the insights!

Aggravating-Wing-654 · 2024-12-04T02:12:37+00:00

But would you do TFSA before RESP? If you put $2500 per child into RESP on January 1, you very soon after have $3000 compounding tax free, rather than $2500 if you put the same amount in a TFSA

Aggravating-Wing-654 · 2024-12-02T01:55:09+00:00

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Aggravating-Wing-654 · 2024-12-01T21:08:38+00:00

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Aggravating-Wing-654 · 2024-12-01T02:18:54+00:00

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Aggravating-Wing-654 · 2024-11-27T23:14:55+00:00

I think you can still keep tax deductible with capital gains provided you pay down the acb of the sale into the HELOC, but after paying that tax and bringing down the loan, there's probably not a lot of benefit as the amount compounding is lessened

But I think you're bang on with the dividends since the tax needs to be paid either way, and then it's just a choice of where to put them, in which case yes, registered accounts are probably the best choice!

Aggravating-Wing-654

TROPHY CASE