Should you borrow to invest in today’s low rates
Canadians consider borrowing to invest as leverage to boost returns with less personal capital. Leverage can raise gains but also magnify losses, as seen when real estate markets fall after peaks. Benefits include access to opportunities and tax treatment for investment loan interest if income is generated. RRSP borrowing is not deductible.
MENTIONED IN THIS ARTICLE
Revenue Canada
Tax strategy on loan interest and capital gains
Gene Martin argues that interest on loans used for investments yielding only capital gains is not deductible. He suggests borrowing for other needs like a house and investing existing funds, to secure a tax deduction and lower overall borrowing costs.
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