Sell it and re-purchase it back?

[vanlan]

I am new to this site and found out it's very helpful with all the experts in RE here.



I have this situation and would like to have your opinion on options:



Fact:

1. Have primary residency [PA], almost mortgage free.

2. LOC from PA for down payment to new house [PB]

3. large morgage on PB

4. move in to PB and rent out PA

5. Not yet done 'chnage in use' for CRA

Goal:

Make the mortgage on PB tax deductable ( from the rental income from PA )

Option:

The only one I can think about is to sell PA and put money in PB and then take it out as LOC and re-purchase PA. But this is costly and risky.



All experts here, any brighter idea that you can share?

 

[Thomas Beyer]

[quote user=vanlan]

All experts here, any brighter idea that you can share?


get a LOC on A .. and exclusively use that money for investments, such as a rental property. Then the interest is tax deductible.



Do not co-mingle LOC for personal stuff like vacations, new car, new boat, Canucks tickets ...



no need to move or sell

 

[vanlan]

Thank you Thomas.



If I move into B as primary residency. Then I believe the interest for mortgage on B is not tax detuctable. And the LOC from A now is for purchasing 'personal' properties, in my opinion, it's not tax detuctable either. I need one more bedroom in B so have to move to B. Any 'strategy' available?

 

[bizaro86]

You could use the "Smith Maneouvre," and apply the rental payments from A to the mortgage on B as principal repayments. Then, you borrow the money back on a HELOC secured by B to pay the bills relating to A (mortgage, taxes, etc).



Because the HELOC portion was used for your investment property, it's tax deductible. This would take a number of years to implement fully.



Regards,



Michael