Canada: The Do’s And Don’ts Of Interest Deductibility
Under certain circumstances, loans can qualify to have the interest deducted at tax time provided the money borrowed is used towards an income making venture. While mortgage interest doesn’t qualify, homeowners can use restructuring strategies, such as taking out a home-equity line of credit against their home and use the money for investment purposes. In this case, the interest on the line of credit would then be deductible for tax purposes. Businesses can also qualify in different ways. If you are unsure of your eligibility for interest deductions, it’s best to use a tax professional’s help in preparing your taxes.
“When structured or restructured correctly; however, taxpayers, including homeowners and businesses, have opportunities to benefit from the tax sheltering created by an interest deduction.”