Smith Manoeuvre [2026]
Convert your non-deductible mortgage interest into a tax-deductible investment loan. Accelerate your wealth building using the standard Canadian re-advanceable mortgage strategy.
Smith Manoeuvre
Debt Conversion Strategy
Strategy Presets
The Essentials
Total Net Worth
$792,428
Extra Wealth Created
+$192,428
Portfolio Built
$582,428
Total Out-of-Pocket Cost
$0
Strategy Impact Summary
By following this strategy, you could be mortgage-free0.0 years soonerthan a standard mortgage.
You'll build a $582,428 investment portfolio while generating an average annual tax refund of $2,692.
Net Worth Projection
25 Year Strategy Lifecycle
Debt Conversion
Non-Deductible vs Deductible Debt
Year-by-Year Financial Audit
Detailed breakdown of debt conversion and growth
| Year | Mortgage Balance | HELOC Balance | Out-of-Pocket Interest | Annual Tax Refund | Annual Dividends | Standard Net Worth | Smith Net Worth | Net Benefit |
|---|---|---|---|---|---|---|---|---|
| 0 | $400,000 | $0 | $0 | $0 | $0 | $200,000 | $200,000 | +$0 |
| 1 | $391,086 | $0 | $0 | $0 | $0 | $208,914 | $208,914 | +$0 |
| 2 | $381,767 | $8,233 | $0 | $51 | $56 | $218,233 | $218,324 | +$91 |
| 3 | $372,023 | $17,977 | $0 | $216 | $218 | $227,977 | $228,446 | +$469 |
| 4 | $361,836 | $28,164 | $0 | $391 | $395 | $238,164 | $239,336 | +$1,172 |
| 5 | $351,186 | $38,814 | $0 | $575 | $585 | $248,814 | $251,050 | +$2,236 |
| 6 | $340,050 | $49,950 | $0 | $766 | $789 | $259,950 | $263,648 | +$3,698 |
| 7 | $328,408 | $61,592 | $0 | $966 | $1,009 | $271,592 | $277,195 | +$5,603 |
| 8 | $316,237 | $73,763 | $0 | $1,175 | $1,246 | $283,763 | $291,759 | +$7,996 |
| 9 | $303,511 | $86,489 | $0 | $1,394 | $1,500 | $296,489 | $307,415 | +$10,926 |
| 10 | $290,206 | $99,794 | $0 | $1,623 | $1,773 | $309,794 | $324,242 | +$14,448 |
| 11 | $276,296 | $113,704 | $0 | $1,862 | $2,067 | $323,704 | $342,325 | +$18,621 |
| 12 | $261,753 | $128,247 | $0 | $2,112 | $2,383 | $338,247 | $361,755 | +$23,508 |
| 13 | $246,548 | $143,452 | $0 | $2,374 | $2,722 | $353,452 | $382,630 | +$29,178 |
| 14 | $230,651 | $159,349 | $0 | $2,647 | $3,087 | $369,349 | $405,053 | +$35,705 |
| 15 | $214,031 | $175,969 | $0 | $2,933 | $3,479 | $385,969 | $429,138 | +$43,169 |
| 16 | $196,654 | $193,346 | $0 | $3,232 | $3,900 | $403,346 | $455,003 | +$51,658 |
| 17 | $178,487 | $211,513 | $0 | $3,544 | $4,352 | $421,513 | $482,778 | +$61,265 |
| 18 | $159,493 | $230,507 | $0 | $3,871 | $4,837 | $440,507 | $512,599 | +$72,092 |
| 19 | $139,635 | $250,365 | $0 | $4,212 | $5,358 | $460,365 | $544,614 | +$84,248 |
| 20 | $118,872 | $271,128 | $0 | $4,569 | $5,918 | $481,128 | $578,980 | +$97,853 |
| 21 | $97,165 | $292,835 | $0 | $4,942 | $6,519 | $502,835 | $615,867 | +$113,032 |
| 22 | $74,471 | $315,529 | $0 | $5,333 | $7,164 | $525,529 | $655,454 | +$129,925 |
| 23 | $50,743 | $339,257 | $0 | $5,741 | $7,856 | $549,257 | $697,936 | +$148,680 |
| 24 | $25,936 | $364,064 | $0 | $6,167 | $8,599 | $574,064 | $743,520 | +$169,456 |
| 25 | $0 | $390,000 | $0 | $6,613 | $9,396 | $600,000 | $792,428 | +$192,428 |
Official CRA Resources
Official CRA Resources
How the Smith Manoeuvre Works
Step 1: Re-advancing
As you make your regular mortgage payment, the principal portion is "re-advanced" into a Home Equity Line of Credit (HELOC).
Step 2: Investing
The money from the HELOC is invested in income-producing assets (like stocks or ETFs), making the interest on that loan tax-deductible.
Step 3: Tax Refunds
The tax deductions generate annual refunds, which you can use to pay down your mortgage even faster, accelerating the cycle.
Step 4: Debt Conversion
Eventually, your entire non-deductible mortgage is converted into a fully deductible investment loan, improving your net worth.