Free Canadian Smith Manoeuver™ Calculator
Model your monthly re-advanceable HELOC investment growth, calculate your annual CRA tax refunds, and compare your net worth with a household that does not borrow to invest.
Your Projected Tax & Wealth Shield
Assumes 7.5% a year, pre-tax and not guaranteed, for both households. Borrowing to invest can lose money: with these inputs the strategy beats the baseline only when returns exceed roughly the after-tax HELOC rate. Estimates only, not tax advice.
25-Year Wealth Projection
Smith Manoeuver vs. a household that spends the same cash each month without the HELOC.
How the Smith Manoeuver calculator works
The Smith Manoeuver converts a non-deductible mortgage into deductible investment debt. Each month the principal you repay on your re-advanceable mortgage is borrowed back on a HELOC and invested in a non-registered account. The HELOC interest is deductible as a carrying charge (line 22100) under paragraph 20(1)(c), so each year you receive a refund of that interest at your marginal rate. This calculator runs the strategy month by month and compares it, at equal monthly cash outlay, with a household that doesn't borrow to invest.
What this calculator assumes
- Mortgage interest compounds semi-annually, as Canadian fixed-rate mortgages do; the payment is the standard amortization payment.
- You pay the HELOC interest out of pocket each month, and the baseline household invests that same cash. The refund arrives once a year and is invested.
- Investment returns are a constant annual rate, pre-tax and not guaranteed, for both households. Tax on dividends, interest and gains is not modelled.
- The refund is the HELOC interest times your marginal rate. The debt accelerator also uses each refund to prepay the mortgage and re-borrow it, moving debt to the deductible HELOC faster.
- The comparison runs for the amortization period you enter.
Frequently asked questions
How much tax refund can the Smith Manoeuver generate?
It depends on your mortgage, rates and bracket. With a $650,000 mortgage at 4.79%, a 6.95% HELOC and a 43.41% marginal rate, the year-1 refund is about $226 because the HELOC starts at zero, and it grows each year as more principal is re-borrowed.
Is the Smith Manoeuver worth it?
Only if your investments earn more than the after-tax cost of the HELOC interest. The calculator shows both sides: at a 7.5% return it comes out ahead over 25 years with the defaults, and at 3% it comes out behind. Try your own return assumption.
Is the interest really deductible?
Interest on money borrowed to buy income-producing investments is generally deductible under paragraph 20(1)(c) of the Income Tax Act, if you can trace the borrowing to the investment. See the CRA's Folio S3-F6-C1 and our guide, and confirm with your accountant.
Which mortgages work with the Smith Manoeuver?
You need a re-advanceable mortgage or a mortgage plus a HELOC whose limit grows as you repay principal, such as a lender's all-in-one product. Availability and terms change, so ask your lender.
Educational estimates, not tax, legal or investment advice. Talk to a licensed Canadian CPA or CFP before acting.