Personal Taxation Q 'n A

You are allowed to claim the interest paid on money borrowed to invest. You must be very careful not co-mingle your borrowing for investments with money borrowed for personal purposes. CRA may require you trace the source and use of funds via a loan or line of credit used for investment purposes. If possible, your line of credit should only be used for investments so as to track the deductible interest accurately. Note if the investments are sold and the proceeds are then used for personal purposes and not reinvested in investments or repaid to the creditor, all or a portion of the interest may no longer be tax deductible.