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Sent: Monday, June 02, 2003 7:51 AM
To: [email protected]
Subject: Question - Mortgage Interest Deduction
Dear Mr Ingram
I am a member of Ozzie Jurrock's REAG group. Having read your
suggestions in Ozzie's newsletter and on your own website with respect
to using mortgage interest on one's home as a tax deduction, (and your
very interesting discussions on a number of other subjects), it is my
intention to register a collateral mortgage on my residence which would
initially have a zero balance owing. I would then "borrow" against
these funds to finance the deposits on rental properties. I would
assume that I could then write off the interest on this borrowed money.
My banker has suggested that he can open up either a line of credit or a
mortgage which I could operate in much the same way as the line of
credit (open and with the ability to make flexible payments into the
mortgage), or even a combination of the two. Both would be secured by
the collateral mortgage. He says that if he technically sets up a
mortgage rather than a line of credit, he can offer me a one-half
percent less on the interest rate.
I did have one question and chatted to Dieter Jurrock the other day. He
suggested that I e-mail you as you could probably tell me if there is
any reason why the money should (from a tax advantage point of view) be
borrowed through either a line of credit or alternatively a mortgage, or
whether this makes no difference at all.
Thank you in advance for your comments
Sincerely
XXXXXXX XXXXXX
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David Ingram Replies:
No difference - If you borrowed it on your visa or MasterCard to use as a
downpayment, the interest is deductible.
You seem to have it figured out.
Just remember, use your rents to pay off personal bills, borrow money to pay
expenses for the rentals if you are short of money.
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