Comments on: Double Dipping: Another Leverage Recipe Part 1 http://www.thefinancialblogger.com/double-dipping-another-leverage-recipe-part-1/ This is where your finance takes place Mon, 15 Mar 2010 23:20:01 +0000 http://wordpress.org/?v=2.9 hourly 1 By: The Financial Blogger http://www.thefinancialblogger.com/double-dipping-another-leverage-recipe-part-1/comment-page-1/#comment-219 The Financial Blogger Thu, 12 Jul 2007 10:47:21 +0000 http://www.thefinancialblogger.com/double-dipping-another-leverage-recipe-part-1/#comment-219 Hi FJ, the amount you should leverage greatly depends on two major factors: First is the amount of cash flow that is available to you (and knowing that interest rate could rise as it is the case now in Canada). Second, you must not leverage more than half your net worth. So technically, 100K suits people with great cash flow and net worth of at least 200K (and I am not counting car for net worth as it is a highly depreciating asset). I usually use 100K as it is a round number, maybe I should consider changing my example for 50K, it would make more sense for several people... good point! FB. Hi FJ,
the amount you should leverage greatly depends on two major factors:
First is the amount of cash flow that is available to you (and knowing that interest rate could rise as it is the case now in Canada).
Second, you must not leverage more than half your net worth.
So technically, 100K suits people with great cash flow and net worth of at least 200K (and I am not counting car for net worth as it is a highly depreciating asset).
I usually use 100K as it is a round number, maybe I should consider changing my example for 50K, it would make more sense for several people… good point!
FB.

]]> By: FinancialJungle http://www.thefinancialblogger.com/double-dipping-another-leverage-recipe-part-1/comment-page-1/#comment-218 FinancialJungle Thu, 12 Jul 2007 01:31:22 +0000 http://www.thefinancialblogger.com/double-dipping-another-leverage-recipe-part-1/#comment-218 I'm not against leveraged investing in general, but $100k might be too risky for the faint at heart. I’m not against leveraged investing in general, but $100k might be too risky for the faint at heart.

]]> By: The Financial Blogger http://www.thefinancialblogger.com/double-dipping-another-leverage-recipe-part-1/comment-page-1/#comment-216 The Financial Blogger Wed, 11 Jul 2007 22:59:13 +0000 http://www.thefinancialblogger.com/double-dipping-another-leverage-recipe-part-1/#comment-216 Len, I think you just have a great idea for the Triple Dip :wink: I'll check if it possible and get back with another post if it is the case! J, For all leveraging strategies, the interest is deductble as long as the investment (and the loan) is in place. If you sell your investment and not reimburse your loan, the interest on the loan is not tax deductible anymore. Accordging to CCRA, the interest on a loan is deductible if funds were used to buy investment in a perspective of receiving an income. If you sell this investment, you will no longer expect any income. Therefore, the strategy ends up there. Cheers, FB. Len,
I think you just have a great idea for the Triple Dip :wink:
I’ll check if it possible and get back with another post if it is the case!

J,
For all leveraging strategies, the interest is deductble as long as the investment (and the loan) is in place. If you sell your investment and not reimburse your loan, the interest on the loan is not tax deductible anymore. Accordging to CCRA, the interest on a loan is deductible if funds were used to buy investment in a perspective of receiving an income. If you sell this investment, you will no longer expect any income. Therefore, the strategy ends up there.
Cheers,
FB.

]]> By: j http://www.thefinancialblogger.com/double-dipping-another-leverage-recipe-part-1/comment-page-1/#comment-213 j Wed, 11 Jul 2007 22:05:43 +0000 http://www.thefinancialblogger.com/double-dipping-another-leverage-recipe-part-1/#comment-213 this 2x dipping seems to be legit. i have a similiar question regarding 2x dipping; how do treat the interest on the investment loan? 1st, as in your ex, we'll get a tax refund of $2400 becuase this is the interest of the loan. my question is this: what happens when i sell the investment? can i again claim the interest as an expense? (eg, similiar to buying stock using a broker. i can claim the fee as my expense.) if so, this will increase my average cost of the investment and therefore decrase my captial gain (assuming gains :p) and hence reduce tax. this 2x dipping seems to be legit.
i have a similiar question regarding 2x dipping; how do treat the interest on the investment loan?
1st, as in your ex, we’ll get a tax refund of $2400 becuase this is the interest of the loan.
my question is this: what happens when i sell the investment? can i again claim the interest as an expense? (eg, similiar to buying stock using a broker. i can claim the fee as my expense.) if so, this will increase my average cost of the investment and therefore decrase my captial gain (assuming gains :p) and hence reduce tax.

]]> By: Len Currie http://www.thefinancialblogger.com/double-dipping-another-leverage-recipe-part-1/comment-page-1/#comment-211 Len Currie Wed, 11 Jul 2007 15:42:00 +0000 http://www.thefinancialblogger.com/double-dipping-another-leverage-recipe-part-1/#comment-211 Hmm.... great idea.. now to figure out how to go about making this work with the Smith Maneuvre to maximize tax savings.. triple dipping? ha ha ha.. jk. Hmm…. great idea.. now to figure out how to go about making this work with the Smith Maneuvre to maximize tax savings.. triple dipping? ha ha ha.. jk.

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