More tax efficient way to invest down payment money?

Leveraging, renting vs owning, making an investment or buying a home?
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Bradshaw
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More tax efficient way to invest down payment money?

Post by Bradshaw »

I will be selling my existing home for a net proceeds of about 200k, and i will be renting with my soon-to-be wife for the forseeable future (3-6 years) until i find a place i want to live long term
All of my RRSP room and TFSA room is gone, and i am looking for a more tax friendly way of investing other than putting all this money into a savings account or GIC. Would preferred shares be an option? I want to take low to moderate risks with this money but i dont like giving ~32% of it to the government. Is there any way around paying my marginal tax rate on interest?

thanks for any response!
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parvus
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Re: More tax efficient way to invest down payment money?

Post by parvus »

Welcome to the forum.

The short answer to your question is maybe. Interest will be taxed at your marginal rate. Will preferreds change the tax equation -- yes because they are tax-advantaged. But you are now adding an element of equity risk -- both real and perceived. Real because in the event of bankruptcy, you line up after the bondholders. Perceived because there can be selloffs because of "risk-off" behaviour -- the flight to safety -- which means the dividend may be reliable, but the capital value fluctuates significantly.

That said, you could try one of the preferred share ETFs. There are several.

(And if you wait a day or so, our resident pref investors will chime in. :wink: )
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