Turn Your Debt into Savings: Cash Damming Explained

Dominique Gonthier

Mortgage Broker

Language(s):
French
English

When you think about your mortgage, you probably focus on the interest rate and monthly payments. However, there’s a tax strategy that can completely change how you manage your finances: Cash Damming. This approach helps you structure your cash flow to convert personal debt into business debt, making the interest potentially tax-deductible. Here’s how it works and why it could benefit you.

What Is Cash Damming?

Cash Damming is based on a simple principle: keep your personal and business finances separate. By using your business income to pay down personal debt and covering business expenses through a dedicated line of credit, you can make the interest tax-deductible. The result? Lower tax bills and faster mortgage repayment.

Who Can Benefit from This Strategy?

This approach is ideal for:

Self-employed individuals
Rental property owners
Sole proprietors or business partners

If you have significant personal debt (such as a mortgage) and regular business expenses, Cash Damming can be a powerful tool.

How to Implement Cash Damming

Separate Your Accounts
One account for business income and another for business expenses.
Use a Line of Credit
Cover business expenses with a dedicated credit line.
Prioritize Personal Debt Repayment
Apply business income to reduce your mortgage while business expenses go through the credit line.
Stay Disciplined
This strategy requires careful management and typically spans several years.

Benefits for Your Mortgage

Tax Savings through interest deductibility on business-related expenses.
Accelerated Mortgage Repayment by focusing income on personal debt.
Improved Cash Flow Management for better financial control.

Points to Keep in Mind

Follow tax rules carefully to avoid mistakes.
Ensure only eligible business expenses go through the credit line.
Assess your credit capacity before starting.

Cash Damming is an effective way for borrowers with business income to reduce taxes, pay off their mortgage faster, and organize their finances more efficiently. At Planipret, we guide you through every step to ensure compliance and maximize benefits.

TERMS	BANKS	MORTGAGE PLANNERS
1 Year Fixed	7.14%	4.89%
2 Years Fixed	6.69%	4.24%
3 Years Fixed	6.35%	3.89%
3 year closed Variable	5.95%	4.45%
4 Years Fixed	6.29%	3.99%
5 Years Fixed	6.34%	3.89%
5 years Variable	5.20%	3.59%
Refinance Fixed or variable	7.65%	3.85%
7 Years Fixed	6.69%	4.59%
10 Years Fixed	7.14%	5.04%
HELOC	5.45%	4.95%

TERMS

BANKS

MORTGAGE PLANNERS

1 Year Fixed

7.14%

4.89%

2 Years Fixed

6.69%

4.24%

3 Years Fixed

6.35%

3.89%