Episode 151 Transcript – Canada VS USA Tax Deductions

Your life with Jessi Johnson.  Today, I would like to point something out as a significant difference between the American and Canadian real estate systems.  I have a lot of emails, or complaints, about how in America you can write-off the interest portion of your mortgage on your principal residence, whereas in Canada, it’s very hard to do.  Well, I shouldn’t say it’s hard, but it’s definitely not easy.  In Canada, we have things like the Smith Manoeuvre and other investment strategies in order to write-off the interest portion of your mortgage on your principal residence.

In America, you just do it right off the bat.  However, obviously, this is a big bonus for the Americans.  But, in America, when you sell your principal residence, do you know that you are forced to pay capital gains regardless of the situation?  Don’t get me wrong, that doesn’t mean that there’s not some advanced loophole to get around that; I have not figured that quite out yet and, to be honest, I don’t really care because I’m not American and don’t plan to do business there.

However, in Canada, for us, we don’t have to pay capital gains in the event that we live in the principal residence for one year.  If you live in it and then move out, rent it out, then that’s considered rental, then you might be in trouble.  However, capital gains can be substantial, a substantial savings when you’re not paid.  So that’s something to keep in mind when complaining about the differences between American and Canadian system.  So with that being said, you can reach me if you have further questions at jessijohnson.ca or firsthomeinfo.ca for first home buyers.  Remember to own your life and have a great day.  Thank you.