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Competitive Edge Blog

  • alison28006

What investments qualify for personal tax deductions?

Can you deduct interest paid on money borrowed for investment purposes? YES, You can deduct interest paid on money borrowed to purchase investments in non-registered accounts, but be aware that there are limitations:

CRA Guidelines state that most interest you pay to earn income on investments can be deducted. If the only earnings your investments produce are capital gains, you cannot claim the interest you paid on the money used to finance those investments. If you own a piece of land that isn’t generating rental income, but will only provide long term capital gains, your interest might not be deductible. Another example could be buying stock that doesn’t pay dividends.

To avoid confusion, it is advisable for borrowers to keep household and tax-deductible debt separate. Several lenders allow you to separate mortgages or lines of credit into multiple accounts in order to simplify tracking. In cases where your debt is used for both personal and investment purposes, the CRA may allocate your repayments first to your tax-deductible debt rather than your personal debt.

It is always advisable to keep personal and tax deductible items /business

separate when it comes to taxes!

Until Next Time,

Christine Walters

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