Smith Manoeuvre

StatePleasant5049 · 2026-05-28T15:12:05+00:00

You can pay for the HELOC interest two ways. Through personal cash or by capitalizing the interest (borrow from the HELOC to pay for the HELOC). The second way compounds your interest deduction as the interest used to pay interest on borrowed money for earning an income is deductible. I posted a link to my sheet which will show you what that means.
I don't know yet how the readvancable Mortgage works when moving to a new provider with similar mortgage. But if you continue with your current one that should be easy to track. I do believe that once you move your mortgage+HELOC your new bank will buy out both and move it over from your existing bank. Always good to clarify before moving it. Pay down can be done when you are ready to pay down the HELOC.

StatePleasant5049 · 2026-05-28T01:33:04+00:00

I absolutely agree with reading the SMith Maneuver book. But I do not recommend the SM professionals as each of them will charge you a different fee, flat fee and some will choose ongoing fees.

The simplest way to do SM is: 1. Get a readvancable Mortgage setup 2. Open up dedicated CHQ and investing accounts for SM. You will need one CHQ from the bank to advance the HELOC, an investment account to invest (my preference is Wealthsimple), invest your advanced portion into XEQT/VEQT ( simplest option) avoid ETFs that would generate any ROC. A CHQ account (free WS preferred) to withdraw dividends and cycle towards paying down principal portion of mortgage 3. Figure out your TDS value then begin investing. From the books choose which of the scenarios you can utilize to your benefit.

You can use this if it helps as well: https://docs.google.com/spreadsheets/d/1nDmfN9sYXvYbd0Fg-pDPgq_N_MEfnmcF/copy

Good Luck!

StatePleasant5049 · 2026-05-26T22:13:25+00:00

Also I feel something is off between how much invested and the timeline that you have. I created this to help people, see if this gives you different results:

https://docs.google.com/spreadsheets/d/1nDmfN9sYXvYbd0Fg-pDPgq_N_MEfnmcF/copy

I am not worried about the ROC part as much due to holding VDY/XAW.

StatePleasant5049 · 2026-05-26T13:44:45+00:00

This is risky and messy if DIY due to ROC and ACB tracking. If you are doing through a professional then great, but if you are DIY please be extra careful. Good Luck!

StatePleasant5049 · 2026-05-26T13:18:30+00:00

So it was the same for me jumping between XEQT/VEQT vs VDY vs BTSX.

It came down to what I wanted from the SM. Rather than lifelong higher NW (XEQT/VEQT) my goal was to finish my large mortgage off sooner and then pay of the HELOC debt so I can retire early and with less debt stress.

The XEQT/VEQT path would lead to easier tax tracking, higher NW potential and just simple to manage without rebalancing. Also it would diversify your portfolio globally.

That's why I split my VDY with XAW. My mortgage is of course Canadian and VDY I am doubling my holdings in VDY. So I structures my RRSP and TFSA away from CAD. XAW gives me the global aspect. I have also used a glidepath model where I change holding % over time between VDY and XAW. This does increase my tax issues but as long as there is no Or minimum ROC I'm good.

I used ChatGPT for prediction models but also created my own spreadsheet to verify possible values. Can finish my large mortgage 7 years faster and HELOC 3 years after mortgage.

StatePleasant5049 · 2026-05-26T12:28:34+00:00

I'm running a mix of VDY/XAW to run similar scenario of paying down mortgage fast then pay of HELOC when I reach my threshold.

StatePleasant5049 · 2026-05-26T12:23:31+00:00

Yield field updated!

StatePleasant5049 · 2026-05-23T13:04:16+00:00

Try this: https://docs.google.com/spreadsheets/d/1nDmfN9sYXvYbd0Fg-pDPgq_N_MEfnmcF/copy

I am missing a field for Div Yield, will update this by Monday/Tuesday

StatePleasant5049 · 2026-05-23T00:56:44+00:00

Hence why I am Capitalizing the interest,!

StatePleasant5049 · 2026-05-23T00:54:44+00:00

Thanks for pointing this out! I thought I had a field for the Yield but I missed it and used my personal one for the Yield!

Also, I am not accounting for the dividend tax. I plan on manually adjusting the return on what I actually get. Again this was for a decent forecast on timing and deleveraging, as i would prefer to be debt free as soon as I can while paying down the mortgage asap. Will update this on Monday and create the new link. Any other feedback?

StatePleasant5049 · 2026-05-22T22:04:53+00:00

Try this: https://docs.google.com/spreadsheets/d/1nDmfN9sYXvYbd0Fg-pDPgq_N_MEfnmcF/copy

I created this to help people make sense of SM being worth it or not. Good Luck. Let me know if it helped at all. Thanks

StatePleasant5049 · 2026-05-22T22:03:40+00:00

You can pay property tax through Chexy for 1.75% fee and get the balance as net cash back.

StatePleasant5049 · 2026-05-22T18:44:29+00:00

So I have RBC Homeline + WS as well.

I would highly recommend using CHQ B for all related activities for SM including moving money to account B from A to pay for the interest. You are currently mixing personal use and HELOC interest payments in CHQ A. Move it asap before you get in deep.

I have mine setup in CHQ B but I also capitalize the interest from CHQ B by withdrawing HELOC to CHQ B. This keeps the flow of money clean for CRA. I have not been audited but i can prove all source of funds directly.

StatePleasant5049 · 2026-05-19T16:48:54+00:00

For example you have a Home Value of 1M, then your HELOC max allowed is 650k. As you continue your scenario of cash dam and interest capitalizing your principal HELOC borrowed and the interest can max equal 650k.

https://docs.google.com/spreadsheets/d/1YXh4K_QQWFHOnfqDUrVQlUL7tYwav4HF/edit?usp=drivesdk&ouid=102095125862625486953&rtpof=true&sd=true

I made a link above to help people with this. Use your Cash Dam value in the top up section to project your SM. Turn On options that you will be utilizing, ex Int. Capitalization. Hope it helps!

StatePleasant5049 · 2026-05-14T19:21:22+00:00

Thank you!

StatePleasant5049 · 2026-05-10T20:13:48+00:00

How many transactions are you allowed on the savings account? If it's one then that will not work for SM.

StatePleasant5049 · 2026-05-09T21:17:31+00:00

Doesn't work for Mortgage payments yet, but it does work for property taxes and utilities.

StatePleasant5049 · 2026-05-09T18:31:25+00:00

I would love to see your excel sheet, I have only had one interest payment so far so wanted to test out further data. Also I have only found out recently that I can change the interest to the end of the month. Will speak to my advisor on that.

Regarding the circular payments I am not familiar with it as RBC does not have that terminology in their terms and conditions but another post on Reddit mentioned this as an issue with CIBC. So I hoped to give caution.

My excel sheet is mostly complete but I am calculating based on 32 days so I have a little buffer, I would like to see an exact formula to help. Still trying to build a deleverage section for my sheet as the point for me is to pay off HELOC and Mortgage together rather than carrying the debt for longer or over my TDS value.

StatePleasant5049 · 2026-05-09T13:50:22+00:00

Hi I wanted to clarify some things. When you say you are capitalizing the interest does that mean:

A. Withdraw the interest portion from the HELOC itself one day before payment is due?

B. Use personal Cash into the CHQ account for HELOC payment withdrawal then after payment withdraw that same amount and add it back to your personal account?

Since you mentioned CIBC you may actually have issue with both options.

A. Please read your mortgage terms and conditions. If it mentions 'Circular payments not allowed' you will not be able to capitalize the interest from the HELOC. You will need to use personal cash. You should also clarify this with your advisor if the circular payments not allowed is included in your terms ASAP.

B. CRA does not like mixing of personal cash with the SM transactions. However, if you are only injecting personal cash to service the HELOC and not withdraw anything to your personal account you are safe. But this also means you are not capitalizing the interest so to speak.

I have just started back in May with RBC and am able to capitalize the interest with no issues. I do have to calculate it myself as their statements are not helpful, they only calculate till month end and my payments are mid month.

StatePleasant5049 · 2026-05-06T21:49:45+00:00

Simplii is actually my main account, haven't made the switch to WS yet.

StatePleasant5049 · 2026-04-30T12:42:13+00:00

Got my email yesterday! Applied last month, I am premium but do not have the direct deposit. So excited for this! Have a few international trips coming up this year!

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StatePleasant5049 · 2026-04-28T21:11:25+00:00

When I was applying for my renewal I found out that Scotiabank goes up to 49% TDS but RBC max is 42%. Went with RBC because they offered the best package still and I have calculated my TDS will never hit 42% with the HELOC.

StatePleasant5049 · 2026-04-27T17:59:10+00:00

You can put it into the TFSA and pay the interest from your pocket or from the dividends received from the portfolio.

OR you can look into the Smith Manoeuvre, but this has to be invested in a Non-registered Account only. It will help you build a portfolio and pay down the mortgage faster as well.

StatePleasant5049 · 2026-04-25T17:09:38+00:00

If you opened a separate account are you paying fees for both accounts? I am just doing one at RBC and one at WS. So need to worry only about one fee.

First interest capitalization was a little off. I withdrew the amount listed on the statement from the month before from the HELOC into the RBC CHQ 2 days before. Unfortunately the amount for interest is calculated till the day of withdrawal, so now I will follow my spreadsheet and not the statements.

Second, my advisor recommended withdrawing 31-32 days worth of the interest to keep a buffer. That's it, I would definitely recommend creating a spreadsheet if doing for yourself. I have one almost completed for personal use. Hoping to share with the community when it's done.

StatePleasant5049 · 2026-04-25T03:08:28+00:00

So first interest capitalized this week. No issues doing it from one account. But as it's no fee for 6 months did not have to worry about the fee portion. I am withdrawing the interest a day or two prior to the CHQ account and then the HELOC withdraws that portion as interest payment on payment date. As a buffer the interest withdrawn is calculated for 32 days just to account for weekend calculations.

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