Would anyone know if there would be any implications Tax wise to refinance a mortgage on a rental?
As we are preparing the details of how we plan to invest our money to reach FI, we are looking into this option. Please be gentle, we are fairly new at this and are just exploring the options :).
What we would want to do is refinance our rental to use the equity (while keeping 20% down on the property) to help pay down our own mortgage faster for the following reasons:
- We are a part of the ''let's pay down our mortgage for peace of mind and then keep on investing'' group, although we do plan to save a part of our yearly savings in some indexed funds all the while trying to get our mortgage paid down in the next 3 years. So yeah, I've read the many threads on the pay down mortgage VS invest so there is no need to turn this thread in one of those :) Thx!
- In Canada, the interest on our mortgage is not deductible however on our rental property, interests constitute an expense. Being near the highest tax bracket with our salaries, we thought that it might make more sense to transfer the debt to that property.
I've had a quick look at our Tax-filing sheet and it would seem to me like the amount of debt left on the property would need to be indicated on our provincial form (we live in the province of Québec) but I don't think I see anything on the Federal tax-filing sheets.
I am wondering in that case if they would consider a refinancing of a property as if we had sold and bought it that year and would tax us on the capital gain from when we first bought the place.
Thanks in advance for any help or suggestions provided!