Usually a HELOC is a second mortgage to secure a loan or a credit line. If money borrowed in this fashion is used for investment, the interest expense will generally be deductible. So the ability to do the borrowing part of The Smith Manoeuvre seems to be in place. Unfortunately, the other half of The Smith Manoeuvre, the ability to recover monthly reductions of the first mortgage in order to increase the investment portfolio, is impaired. Do not let a banker convince you to use a simple HELOC to implement The Smith Manoeuvre – there is a much smarter way to set up your financing that costs no more to establish than a HELOC, but avoids subsequent operational difficulties. It is called a readvanceable mortgage. Your financial planner and your mortgage broker will teach you the important reasons why you don’t want to use HELOC’s. Be certain you are getting a readvanceable mortgage.