Bake Yourself a Tax Deductible Mortgage
Posted March 28th, 2009 in Observations, R.E. Stories, Real Estate, Real Estate Stuff | 
Have Your Cake and Eat It
Have you found the perfect mix of owning a home and retiring comfortably turning into your Canadian nightmare?
Consider the following:
“Jim and Lisa Smith are 38 years old with a marginal tax rate of 39%. They purchased their last home for $500K and required a $300K mortgage at Closing.
Jim and Lisa are concerned that they may not have enough money to guarantee a comfortable retirement. They decide to further accelerate their mortgage strategy with TDMP.
On advice of their Financial Advisor, they borrowed to invest in a tax efficient Mutual Fund which pays monthly distributions of $1,340. These cash distributions are used to make extra monthly payments on the mortgage and are reinvested after paying the interest on the investment loan.
By integrating the Income Fund into the Tax Deductible Mortgage Plan, Jim and Lisa will acclerate their financial benefits and realize:
Jim and Lisa will need NO additional cash to achieve these financial results!”
TDMP – Tax Deductible Mortgage Plan
Invited to attend a seminar sponsored by the Rob Regan-Pollack Team of INVIS, the crowd gathered to hear words that may make you reconsider the way you structure your mortgage.
It’s a very complicated package that combines tax, mortgage and investment strategies. Given the perfect combination of ingredients you may end up with your cake and be able to eat it too. Like any fabulous recipe its ingredients are a team of dedicated specialists that includes mortgage advisors, accountants, financial advisors, banks and investment strategists. Be clear in knowing, that without these people in the mix, the odds are your cake will fall flat. Once the ingredients are placed in the bowl and mixed, the process of paying off your mortgage more quickly and accumulating substantial wealth appears to work – at least, that’s what the description accompanying the recipe suggests.
Reservations
Any cook will tell you that while they try their best, they never warranty that the result will be exactly as described in the instructions. They may come close on a somewhat consistent basis, but only because they have given their full attention to every detail and with all that, not every cake will be perfect. The TDMP strategy is not much different. In print, all seems possible and the pictures look great, however, the reality of 15 to 30 years may exact a different result.
Prior to publishing, the better cook book recipes have had the luxury of time testing. This plan has not shared that privilege. While it seems to take into account all contingencies, those very contingencies rely heavily upon all ingredients maintaining a very high level of projected stability for a very long time. Forgoing all else, the winds of time and politic may alone prove the largest detrimental factor. Time equals change and it is that unknown change that makes guarantee elusive. In 15 to 30 year period a lot can happen, often the most serious being something over which you will have little or no control. Unfortunately, should your untried recipe fail, you will not have enough time to bake a new new cake.
Thinking this might be for you? Here are thoughts to consider. Reflect upon premature death, disability, divorce, loss of employment, stock market variances, or the tax department deciding to change it’s ruling.
On paper this plan looks like a perfect dream cake – for some it may be. In particular those with financial ability, a stable career, the capability to understand and willingness to accept risk. For others, it may be burnt cake.
Origins and Discussions of this plan known as – The Smith Manoeuvre
The following links offer some background to the concept and it’s application.
*Disclaimer: Information provided by TDMP, INVIS, and the Rob Regan-Pollick Team and the linked sources.
** YatterMatters and the owner of this blog does not endorse nor recommend that the information provided will be accurate or suitable for any or all individuals. It is recommended that you contact the noted parties for further information to determine the feasibility of the TDMP program and it’s application to your financial circumstance. Further, it is recommended that you discuss this plan with independent parties.
***Quotation segment courtesy of M-Link Mortgage Corporation operating as TDMP.COM Copyright 2009. TDMP.COM. All Rights Reserved.
Hi Larry,
This sounds like a great plan on paper but the real world is different. After the market fell over 30% (2008) the distributions for these funds have been cut with more cuts in 2009 unless this market gains alot more. Which means the client has a investment that has gone down and the distribtion in some cases can not support the loan! If you want more details drop me a line.
Brian