Cash Damming vs. The Smith Manoeuvre

The Smith Manoeuvre and the Cash Dam convert your typical mortgage into a tax-deductible mortgage over time, but the implementation and outcome of both strategies differ. The key to the cash-damming strategy is that interest paid on borrowed amounts used for business expenses is tax-deductible.
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In contrast, The Smith Manoeuvre effectively makes interest on a residential mortgage tax-deductible in Canada. As a financial planning strategy, The Smith Manoeuvre involves converting the interest a homeowner pays on their mortgage into tax-deductible investment loan interest.