Rental Cash Damming Strategy
Turn rental cash flow into a smarter repayment plan so you can pay down your mortgage faster while keeping your finances organized.
What it is
Rental Cash Damming is a tax strategy that helps you pay down your personal (non-deductible) mortgage faster by using your rental income to attack that mortgage, while you re-borrow to cover rental expenses.
Over time, this can shift interest from non-deductible to tax-deductible, because the borrowing is tied to rental operating costs (not personal spending). Clean structure + clean tracking is everything.
Important: This is not tax advice. The strategy must be set up and traced properly and reviewed with your accountant.
Who this is for
You own (or are buying) a rental property
You have rent coming in and ongoing expenses like interest, taxes, utilities, insurance, repairs, or condo fees.
You have a personal mortgage you want to crush faster
The goal is to reduce non-deductible debt while improving overall efficiency.
Your rental may be cash-flow negative (and that’s okay)
Even if the property doesn’t cash flow today, this strategy can still work. It often becomes more impactful when expenses are higher, as long as the plan is affordable and structured correctly.
How it works (Simple steps)
01
We map your mortgage, rental cash flow, and expenses
We list which rental expenses are eligible, confirm your mortgage structure options, and stress-test affordability.
02
Rental income goes toward your personal mortgage (the “dam”)
Instead of rent sitting in chequing and disappearing, we direct it strategically to reduce your personal mortgage faster.
03
You re-borrow to pay rental expenses (clean tracing)
Rental expenses are paid from a dedicated credit line/mortgage segment so the interest is tied to income-producing use (and may be deductible).
04
You follow a simple monthly routine
A predictable deposit/pay system that keeps the strategy compliant, trackable, and easy to maintain.
Benefits
- ◈ Pay down your personal mortgage faster (non-deductible debt)
- ◈ Potentially increase deductible interest over time through proper use-of-funds tracing
- ◈ BCleaner rental bookkeeping with separate accounts and consistent payments
- ◈ Works even when the rental is cash-flow negative (if affordable) because expenses can be funded through the structured borrowing
- ◈ Repeatable system you can expand across multiple properties
Example (Simple scenario)
Let’s say your rental collects $2,700/month in rent, but total rental expenses run $3,200/month (mortgage interest, taxes, insurance, condo fees, utilities, repairs). That’s -$500/month cash-flow negative.
With Rental Cash Damming:
- The $2,700 rent is directed to your personal mortgage to reduce non-deductible debt faster.
- Rental expenses are paid from a dedicated credit line/mortgage segment designed for this strategy (with clean tracking).
- Over time, the interest related to those borrowed rental expenses may be tax-deductible, while your personal mortgage balance drops faster than it would otherwise.
Key point: Negative cash flow can still fit this strategy because higher expenses often mean more borrowing tied to rental use. The deal must still be affordable and structured correctly.
Important considerations
01
Structure matters
This works best with the right mortgage/credit setup and lender rules that support re-borrowing.
02
Tracing and record-keeping are non-negotiable
To support deductibility, funds must be used for rental expenses and tracked cleanly. Your accountant should review the setup.
03
Affordability and risk must be stress-tested
Negative cash flow can work, but only if you can carry it comfortably and handle rate changes, vacancies, and repairs.
My Process
You’ll get a clear monthly routine, account flow, and a checklist so the strategy stays clean and trackable.
Discovery call + goals
Strategy build (debt map + cash flow plan)
Product match + application plan
Setup + walkthrough
Ongoing check-ins when needed
FAQ
Yes, but the setup and intent matter. It must be structured correctly and supported by documentation.
Not always. The right structure depends on your property, lender rules, and the bigger plan.
This is usually about cash flow efficiency and debt reduction, not rate shopping.
No. I’ll explain the strategy and structure, but you should confirm tax treatment with your accountant.
Yes. It becomes more valuable as you scale.
We can still plan, but the strategy changes. The first step is understanding the numbers.
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Want to see if Rental Cash Damming fits your situation?
I’ll map your cash flow, debts, and lender options and show you the cleanest path forward.