In today’s Finance Minute, one of the common questions I get from my real estate investors is this: Should I pay off my rental property mortgage first? My favourite advice is pay off your personal mortgage fast and your rental property mortgage last.
Why is this important? Because of tax reasons. You cannot write off or claim the interest that you pay on your personal mortgage as an expense from your personal tax return. And you can do so on your mortgage on your rental property. For example, on a $300,000 mortgage, the interest that you pay may be around $9,000. That interest cost cannot be deducted off your tax return if the mortgage is on your personal mortgage. But if that mortgage was for a rental property you can write off the whole thing from your tax return! You want to write off as much interest cost from your tax return, so you owe less in taxes.
Of course, you’ll want to talk to your accountant to make sure you are taking advantage of other potential savings that you can when you own rental properties. If you need clarification, please send me a private message and I would be happy to help you.
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