Expert: taxman at centa.com Date: Monday October 09, 2006 Time: 05:33 PM -0400 QUESTION: Hello, My husband and I are interested in purchasing Limited Parternership units through a company who is raising capital to purchase land for their company here in Alberta. They had numerous offerings and are all fully financed and some have already been paid back to investors. The rate of return is 12% and interest paid quarterly. The average term is about 2 years. Our question: If we use borrowed funds (ie: line of credit), is the interest on the LOC tax deductable? Will this off-set the interest we earn on the investmenrt? Thank you for your assistance. Kind Regards, ============================================== david ingram replies: If you are borrowing the money to invest for high interest returns, the interest on the loan is deductible. You should read the November newsletter in the top left hand box at www.centa.com and the CRA Bulletin, IT-533 which you can find at: http://www.cra-arc.gc.ca/E/pub/tp/it533/it533-e.html Now, I can give you a list of a few hundred people who did essentially the same thing you are proposing to do when they invested with ERON Mortgage Corporation in Vancouver. There are a lot of economists who are convinced that most of the bubble has taken place. It would not take much of a downturn in the market for the situation you mention to turn disastrous. hope this helps ------------------------------------------- David Ingram's US / Canada Services US / Canada / Mexico tax, Immigration and working Visa Specialists US / Canada Real Estate Specialists My Home office is at: 4466 Prospect Road North Vancouver, BC, CANADA, V7N 3L7 Cell (604) 657-8451 - (604) 980-0321 Fax (604) 980-0325 Calls welcomed from 10 AM to 10 PM 7 days a week Vancouver (LA) time - (please do not fax or phone outside of those hours as this is a home office) email to taxman at centa.com <mailto:taxman at centa.com> www.centa.com <http://www.centa.com/> www.david-ingram.com <http://www.david-ingram.com/> Disclaimer: This question has been answered without detailed information or consultation and is to be regarded only as general comment. Nothing in this message is or should be construed as advice in any particular circumstances. 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