I'm trying to wrap my head around getting a 2% mortgage interest hit and having an investment account VS 3% Heloc which is the investment account. Have you seen anyone showing numbers, or doing the math for the effectiveness on the SM over normal investing?

How much is the deduction for investment interest? I can`t seem to find the tables to see how much you can write off on the HELOC.

The deduction is the full amount of interest paid on your investment loan portion. It is deducted in Line 221 of your Federal tax return.

The precise calculations are dependant on your personal situation: income per adult, province, value of home, size of mortgage, size of non-registered investments, and savings applied to investing (non-registered only).

Here's an example so you can understand the calculation of mortgage + regular investing vs. Smith Manoeuvre.

Single earner family $80,000, QC, $300000 home, $150000 mortgage @2.6%, $0 investments, $500 savings. First thing is to refinance the mortgage back to 25 years (just to make the calculation easier).

**Regular Investing + Mortgage Payoff:** After 25 years, you will have a paid off house plus $346,500 investment account ($500 a month @ 6% compounded for 25 years).

**Smith Manoeuvre:** After 25 years, you will have your house, a $195,000 investment loan (HELOC), and a $736,000 investment account (also returned 6%) for a net investment account of $541,000. Basically you are nearly $200,000 better off and that will continue to grow as your tax deductions keep coming every year.

Here's why, first of all you borrow back the principal portion of your mortgage payment to invest. That means you start investing $773/month instead of $500. Next, you have $1,600 in deductible interest expenses in the first year alone, saving you about $530 in taxes which you can reinvest.

At the end of 25 years, you will have a $6,240 interest expense each year ($195,000 x 3.25%) which saves you over $2,300 in taxes. I've attached a photo of the inputs and a projection of your return. Red line = mortgage, Blue line = investment loan, Yellow line = total loans, Green line = investment account @ 6%.