Purchase of second property in Canada

Hello David,

I was hoping you could point me in the right direction...

I purchased a home 2 1/2 years ago that I currently rent out, it's also listed as my principle residence, and yes I am using the interest on the mortgage as a tax deduction thanks to your Thursday night seminars. I would also like to purchase a studio condo unit and rent it out, I have the cash and could buy it outright but thought it wiser to take out a line of credit or HELOC against my current home so that I may right off the interest on the loan. The condo is under $25,000 and I was just wondering if this is the best way to go...?

Kind regards

david ingram replies:

Unless you lived in the rented home first, it can not be declared a principal residence but I think that you did and the home is in the Princeton area and was your residence.

If you borrow money to buy the condo, it will be a deduction but do NOT get caught up where you are paying 5 or 6 percent and only getting one and a half or two.

Unless you are getting a better return on the money, you should likely pay for the condo.