MFDA to advisors: Watch the misleading claims

MFDA to advisors: Watch the misleading claims

MFDA to advisors:  Watch the misleading claims

“Every once in a while we will see someone using the slogan ‘Make Your Mortgage Tax Deductible’ and we will jump in and intervene and get them to withdraw that kind of marketing material because any investment loan you can deduct the interest payable… In our view we [MFDA] think this is misleading to claim that you’re making your mortgage tax deductible; you’re still paying your mortgage and getting the same interest tax-treatment as you would with any other investment loans.”

This particular case centred around a two-year period between 2005 and 2007 prior to the recession.

Since then it seems advisors and investors are both more reluctant to use leverage to any great degree. Add to this greater scrutiny from both the regulatory and dealer level and it’s clear leveraging schemes such as the Smith manoeuvre aren’t the darlings they once were.

“We have seen a decrease in the prevalence of these types of manoeuvres. From an enforcement perspective, while we haven’t taken our foot off the gas by any means, we are not seeing the same frequency and incidence of this kind of leveraging (the various maneuvers, encouraging investors to tap into their home equity) as was apparently occurring pre-2008.”

It seems you can teach an old dog new tricks after all. 

read more > 1 2