Aur dusri baat, Kaliaji yaan Chopraji, apun ne yeh Smith manoeuvre doing to pay down mortgage faster and converting taxable inteest to non-taxable interest, yeh kya kosher hai kya?
Actually apun ne apla tax preparation aadmi ko giving and he saying "highly irregular", lakin another, not my usual, saying "brilliant".
Is chakar pe kuch light shine on kar sakte ho? Sab CD's ke benefit ke liye bhi.
yaan any other persons can shedding light, maybe one tax specialist?
Are we having any tax specialist on board?
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hinglish zindabad
Quote:
Originally posted by chandresh
Quote:
Originally posted by morning_rain
I wouldnt take a 35 year mortgage..you will pay so much more on your interest..plus be in debt much longer !
However, I think this can help in buying a property for investment since it most probably will produce a positive cashflow if rented out, so the property will pay for itself.
Chandresh
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hinglish zindabad
Quote:
Originally posted by transmogrifier
Aur dusri baat, Kaliaji yaan Chopraji, apun ne yeh Smith manoeuvre doing to pay down mortgage faster and converting taxable inteest to non-taxable interest, yeh kya kosher hai kya?
Actually apun ne apla tax preparation aadmi ko giving and he saying "highly irregular", lakin another, not my usual, saying "brilliant".
Is chakar pe kuch light shine on kar sakte ho? Sab CD's ke benefit ke liye bhi.
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What does all this mean in plain English or Hindi ?
Quote:
Originally posted by transmogrifier
Aur dusri baat, Kaliaji yaan Chopraji, apun ne yeh Smith manoeuvre doing to pay down mortgage faster and converting taxable inteest to non-taxable interest, yeh kya kosher hai kya?
Actually apun ne apla tax preparation aadmi ko giving and he saying "highly irregular", lakin another, not my usual, saying "brilliant".
Is chakar pe kuch light shine on kar sakte ho? Sab CD's ke benefit ke liye bhi.
yaan any other persons can shedding light, maybe one tax specialist?
Are we having any tax specialist on board?
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You know you are a desi when ........ You spew forth the virtues of India, but don't want to live there...............You've never had a tanning salon membership
Loser.
What this means is that the interest that you pay on your mortgage is not tax deductible (like in the USA) for Payroll people.
What Engr. Smith says is that if you borrow the amount of principle that you pay for each mortgage and then invest it in some diversified mutual funds, then what happens is :
Say your mortgage is 350K and you pay $2500 each month on mortgage (We assume that you pay $1000 on your principal and $1500 on your interest), then Engr. Smith asks you to borrow $1000 from your bank each month and invest it in a diversified mutual fund.
So technically, every month you owe $350K to your bank. And he says that the amount you invested in the Diversified Mutual fund can be written off as a tax deduction
over the course of the years , Engr. Smith says that you will transform $350K into an investment income, the tax in which you can write it off.
Now the negetive points :
First, maybe your bank will not agree to this.
second, you need an the diversified mutual fund to give you atleast the mortgage interest for this to work 100%. Say your mortgage is 5%. and what if your mutual fund loses 30%. So you will be at a more loss.
My conclusion-> This is where canadians falter. They donot know more than Canada or USA. if you were to invest in Excel bonds (india fund, china fund, india-china fund) then your risk is reduces as they can give you atleast 5% +. I think only CA's can ever take this kind of risk. An average desi is too much afraid incl . me.
My 2 nd. conclusion-> this can be worked out in another way. You can either borrow at a low interest rate or through the equity of your house and invest in good diversified mutual fund. In case you get more than 5% gain, then it is the same storey. Only thing, you invested without your house. So Engr. Smith statergy does not make sense to me
TK
Disclaimer : Engr. Smith is a hypothetical person.I donot sell mutual funds nor do i recomend a mutual fund. This post is just my view. You should not follow it blindly. Contact your bank, CRA, Financial consultant, your parents and grandparents before you can make this startegy. I will not be responsible for your gains nor losses. You should not thank me for my cleverness or abuse me for my foolishness. I am also not suggesting you to borrow money or borrow from the equity of your house and invest in mutual funds. Mutual funds is a risky business and no one can ever pin point the returns. The returns depend on the pol;itical situation, world ecoonomy and the cleverness of the fund manager.
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I am a Gents and not a Ladies.
Amit Kalia and Pramod Chopra.
Awaiting your comments on Smith manoeuvre. If already engaged in it is it on up and up? Matlab kuch do number ka kaam do nahin?
I am getting conflicting reports from different CA's and TAX peoples.
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hinglish zindabad
Quote:
Originally posted by jake3d
Quote:
Originally posted by transmogrifier
Aur dusri baat, Kaliaji yaan Chopraji, apun ne yeh Smith manoeuvre doing to pay down mortgage faster and converting taxable inteest to non-taxable interest, yeh kya kosher hai kya?
Actually apun ne apla tax preparation aadmi ko giving and he saying "highly irregular", lakin another, not my usual, saying "brilliant".
Is chakar pe kuch light shine on kar sakte ho? Sab CD's ke benefit ke liye bhi.
Coincidentally, I'm reading about the Smith manoeuvre too and find it interesting. Apparently with the way Quebec deals with taxes on investment loans, its not as beneficial as in the rest of the country (as far as the strategy goes)
Heres some info for the others...
http://www.moneysense.ca/spending/home_mortgage/article.jsp?content=20031023_142459_4168
p.s: I'll save you the trouble...I did read this post of yours . Everybody is entitled to a break
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hinglish zindabad
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