— Finance — 11 min read
When wrestling with the question of whether to buy or rent my primary residence in Ontario, Canada, this has served as a living document frequently updated with latest resources and thoughts. Keeping them public and open to discussion has sharpened my thinking and kept me sane as I've hashed out different ideas and approaches with others.
Some of the notes below are out of date, and some will not be my final conclusions in a couple years, so come along for the ride and clarify with me any questions!
For my 2019 rough notes application of the Principles for Navigating Big Debt Crises to the Canadian Real Estate market, see The State of Canadian Real Estate in 2019. It probably deserves fresh guidance given the changing winds from COVID-19 in 2020 but alas, I have not yet.
Early in my investigation, I noted some pros/cons that immediately came to mind. Eventually, we landed on buying given the much more comparable rent vs buy dynamics in Kitchener (houses renting for $2000-2500, mortgage payment for similar house at $1800-2500) in contrast to other cities like Montreal where it can be strictly better to rent given larger rent supply and less rates.
How to make mortgage interest deductible? With the Smith Manoeuvre.
Not natively part of Canadian tax code, it is possible with a readvanceable mortgage where increasing HELOC room is borrowed and invested in dividend paying stocks (which pay more than the HELOC or mortgage interest rate) to make mortgage interest tax deductible (like it is in the United States).
Read more about the Smith Manoeuvre here: