— Cash Damming Strategy
Cash Damming: The Business Owner's Tax-Efficient Mortgage Strategy
A CRA-aligned strategy that converts non-deductible personal mortgage debt into tax-deductible business debt — using your existing business cash flow.
"Our accountant couldn't believe it was legal. It's brilliant." — James & Lisa, Calgary, AB
What Is Cash Damming?
Cash Damming is a structured financial strategy that uses business income to pay down personal mortgage debt while redirecting business expenses to a line of credit.
The result is a gradual conversion of non-deductible personal mortgage interest into potentially tax-deductible business debt — without changing your cash flow.
How Cash Damming Works
Who Is Cash Damming For?
IDEAL CANDIDATES:
- Incorporated business owners
- Self-employed professionals
- Business owners with consistent business expenses
- Homeowners with existing mortgage and business income
Cash Damming is not suitable for employees or those without regular business expenses. Proper structuring and professional oversight are essential.
Potential Benefits
- Convert non-deductible mortgage interest
- No change to monthly cash flow
- Accelerated mortgage repayment
- CRA-aligned when properly structured
Risks & Considerations
- Requires consistent business income
- CRA compliance is critical
- Improper structuring can invalidate deductions
- Professional oversight required
For CRA guidance on interest deductibility, see the Canada Revenue Agency.
Cash Damming vs Smith Manoeuvre
| Feature | Cash Damming | Smith Manoeuvre |
|---|---|---|
| Best For | Business owners | Investors / employees |
| Income Source | Business income | Employment / investment income |
| Investment Required | No | Yes |
| Mortgage Conversion | Business debt | Investment debt |
Some clients benefit from both strategies simultaneously. Our team assesses your complete financial picture before making any recommendations.
Is Cash Damming Right for Your Business?
If you're an incorporated business owner or self-employed professional, Cash Damming may significantly reduce your tax burden while accelerating mortgage repayment.