Interview #8-The Smith Manoeuvre with Robinson Smith

Today on the FI Garage The Mechanic and The Accountant have a Red Truck IPA and get to speak with Robinson Smith, author of Master Your Mortgage for Financial Freedom. Robinson’s father Fraser created the Smith Manoeuvre in order to help Canadian’s make their debt tax-deductible and help more Canadians achieve financial freedom. Robinson has now picked up the torch and released a new book to help you master your mortgage and build wealth.

Beer – Red Truck Hard Day Northwest IPA [0:42]

Robinson Smith

  • Basic’s of the Smith Manoeuvre (3:01)
  • Maintaining your total debt (8:00)
  • Deductible Debt vs Non-deductible debt (8:58)
  • Tax-free day (14:05)
  • Reducing your taxes (15:05)
  • The after-tax cost of borrowing (22:20)
  • Capitalization of interest (23:15)
  • Cash Flow Dam (35:12)
  • Test run of Smith Manoeuvre calculator (40:40)

Don’t forget to leave your comments on the episode page by the end of February 29th, 2019 in order for a chance to win a copy of the book and exclusive access to the calculator.

Links

2 Comments

  1. I guess the episode is a year old but got reposted so I was a bit excited to enter a contest. If I could travel back in time and enter my question would have to do with the Smith manoeuvre and partial property rentals.

    I rent half of my house and live in the other half and already write off a proportion of my interest due to the rental. Could you do a partial Smith manoeuvre to cover the interest from the half you can’t deduct.

    1. Hi Alex, Yes after our website crashed, I’ve been slowly adding the old episodes back up. As for you question. The usual answer applies, that we are not qualified to give advice, and that you should consider speaking to a Smith Manoeuvre certified accountant or advisor to ensure you set up the strategy correctly. That said, my understanding of the SM is that yes, you could apply it to the other part of your mortgage. You would need a re-advanceable HELOC and be very careful with your accounting. You would transfer out only the principle paydown, after rent paydown has been calculated, and invest that in a margin account. There are other ways to manipulate rental income within the SM too, by applying 100% of the rental income against principle and then borrowing back the expenses to make them tax deductible. It would be worth reading the book, and as I said, make sure it is all set up correctly.

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