Transitioning mid-year from Rental Cash Damming to Smith Manoeuvre (TD FlexLine) – Advice on setup?
Hi everyone,
I’ve been using a TD FlexLine for about 1.5 years for Cash Damming with my rental property. I’ve been using the HELOC portion strictly to pay rental expenses while using the rental income to pay down my primary mortgage.
I’m now looking to shift gears and start using the HELOC for the Smith Manoeuvre (investing in a non-registered account) instead of rental cash damming.
My dilemma:
Since we are mid-year, I’m worried about muddying the waters for the CRA. My TD FlexLine currently allows only one stream/bucket for the HELOC.
Can I change the use mid-year? If I start withdrawing for stocks/ETFs from the same sub-account I was using for rental repairs/utilities, does that create a tracking nightmare for interest deductibility?
TD FlexLine Setup: For those with TD, is there a way to open a second separate HELOC sub-account under the FlexLine to do both that I'm unaware of?
Re: CRA tracing: Is there a clean way to stop the cash damming and start the SM mid-year without triggering an audit flag, or should I wait until Jan 1st?
Has anyone made this switch mid-year? Would love to hear how you structured your accounts.
Bonus question - which line item in the tax form would the SM transactions fall under, the same as the cash dam?