Deduct your mortgage interest! Yes, that’s correct
You may be aware that you can deduct the mortgage interest if you own a revenue property. But did you know there may be a way for you to deduct the interest on your principal property?
If you are in a position where you can buy your principle property with cash, then the following scenario may work for you.
The first step is to obtain mortgage approval. Depending on your personal life situation, whether you work fulltime, self-employed, or retired, will determine the amount of mortgage you will be approved for, and the interest rate they are willing to give you.
Once you find the property you wish to buy, you would use your personal money to purchase the property, then obtain a mortgage for the property you just purchased.
You could then use the mortgage money to invest.
Because mortgage rates are at an all-time low, you can borrow money using the mortgage for very little, then claim the interest expense as a deduction which further reduces the cost of borrowing, then invest the money to earn more money. It represents an opportunity to increase your rate of return over time.
This isn’t for everyone, but if this intrigues you, speak with your financial advisor to see how it may apply in your situation.