Convert your non-deductible primary mortgage into tax-deductible debt using rental income. See your potential tax savings and mortgage freedom date.
Tax Deduction Conversion
Convert non-deductible to deductible
Wealth Projection
30-year net wealth forecast
Mortgage Freedom Date
Accelerated payoff timeline
Debt Conversion Timeline
9.5 years
Total Tax Refunds
$145,732
Payments Reduced
58
Future Payment Savings
$162,647
Pre-Tax Income Equivalent Savings
$271,078
With Rental Sale
Sell rental, pay off primary
12.0 yrs
Holding Rental
Keep building equity
25.25 yrs
Future Rental Value
$1,221,610
Invested Payment Savings
$188,145
Net Wealth Improvement
$1,409,755
Want help implementing this strategy?
Your rental income goes directly to your primary (non-deductible) mortgage principal, accelerating paydown.
Pay all rental expenses from your re-advanceable HELOC, creating tax-deductible investment debt.
Deduct the HELOC interest used for rental expenses, generating annual tax refunds.
Disclaimer: This calculator provides estimates for educational purposes only. Consult with a qualified tax professional and mortgage broker before implementing any tax strategy. Individual results may vary based on your specific financial situation.
Cash damming is a tax strategy for rental property owners. Instead of using rental income to pay your personal mortgage, you deposit it into a separate account to pay personal expenses, then use a HELOC to cover the rental property expenses. This converts non-deductible personal mortgage debt into tax-deductible investment debt over time.
Yes. Cash damming is a legitimate tax planning strategy recognized by the CRA. The key principle is that interest on money borrowed for the purpose of earning income (investment/rental) is tax-deductible under Section 20(1)(c) of the Income Tax Act. Proper documentation and separate accounts are essential.
Savings depend on your marginal tax rate, rental income, and mortgage balance. A property generating $2,000/month in rent with a 50% marginal tax rate could generate approximately $12,000/year in new tax deductions, saving $6,000/year in taxes. The savings compound as more of your debt converts to deductible.
Yes. A re-advanceable mortgage with a HELOC component is essential. As you pay down your mortgage principal, the HELOC limit increases by the same amount. You then draw from the HELOC to pay rental expenses, keeping the investment purpose clear for CRA deductibility.
Risks include: variable HELOC rates (currently higher than fixed mortgage rates), CRA audit exposure if documentation is poor, the complexity of maintaining separate accounts, and the fact that you're not actually reducing total debt — just converting its type. Consult an accountant before implementing.
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