The Smith Maneuver is a popular technique that allows Canadians to claim their investments as an expense. This is done by borrowing money.
If you\’re borrowing $100K against your home, at say 3% interest and making 7% interest on an investment (such as an index fund), then that means you could make an extra $7K per year.
But wait, you have to pay interest on that loan. So you pay $3K in interest.
But wait, now you can write that off as an investment expense. So you get $1K back.
Overall, in this example, you can make $5K/year per every $100K you borrow against your house.
Is this worthwhile? It certainly can be for people closer to retirement and don\’t mind having a mortgage to pay off and comfortable with putting their money into the stock market.
However, for a Real Estate investor (especially in Canada), an extra 5% on your cash is not a lot of money. Those folks are better off putting their money into a BRRRR strategy.
More info here:
https://www.savvynewcanadians.com/understanding-smith-manoeuvre/