Smart Mortgages for Contractors
Contractors and Construction Workers need mortgage freedom concepts badly.
This is an industry of feasts and famines. As a contractor, you may have steady work for a while.
Sometimes more work than you can handle. Then when times are tough, there is nothing for months until you begin to consider a move out of town or even a change of profession. Then suddenly, the jobs come in a little at a time at first, then, if the economy is booming, it just booms.
Take the example of the 2010 Olympic City, Vancouver Canada. Contractors cannot keep up. The boom is expected to last until the Olympics come. Now is the beginning of the huge construction boom before 2010. And it comes on top of a sudden dramatic expansion of new construction in the housing industry.
Mortgage Freedom advice to contractors is to stash away all that extra income by paying down the mortgage principal fast now. Use your Mortgage as your piggy bank for big cash. This is not Child's Play. If you put those extra earnings in a real bank your returns are less than 3.00%. This is not the place, but I'll explain quickly the meagre 3.0% interest is loaded with a huge tax burden. You are taxed fully on any interest earnings. So much so that your planner will show your returns on a Term Deposit or GIC as negative when you deduct the tax you pay at 30% or 40% and you factor in inflation at even 2.5%, your real returns are indeed negative.
Income Trusts: The hottest investment trend to earn positive returns and receive a regular monthly Income
You must learn more about Income Trusts the Business and Income Trusts, the tool that delivers Cash Flow. You'll follow the advice of Rich Dad when you own Investments that deliver Cash.
Your Smart Mortgage as an Investment
The Smart Mortgage Investment Program (SMIP) is a program that allows you to treat the equity in your home as an investment also. When you pay down the mortgage, the returns on those fast-pay dollars are greater than the mortgage interest rate. If the interest charge on your mortgage is 5.0%, for example. Any fast pay dollars you use to pay the mortgage down automatically gets you a return of 5.0%. Now compare that with the best GIC rates at your Bank!
But, The good news for Building Trades and for Contractors continue. When these extra dollars show up as equity in your home you have no taxes to be paid on the 5% interest savings. In fact, you could go back to the bank the day after you pay the mortgage down and borrow the money back to invest. This new investment then becomes a tax deduction according to Canadian tax rules. Instead of creating a tax problem with the interest earnings on a GIC, you give yourself a tax deduction by borrowing your own money and investing it again.
Your mortgage gets paid off faster because you pay down the principal with those fat profits from the sub-contracting jobs. You can leave the funds there as equity in the home. Or you could take it back and re-invest it. Our SMIP strategy uses different techniques that make a big difference in the benefits to you. So go ahead and do the things you are good at. But let the professionals at fast mortgage freedom handle your high finance plans for You.
Electricians, Plumber Contractors
Next to general contractors, Electricians and Plumbers experience job fluctuations most. As a sub-contractor, you are self-employed. You have the advantage to deduct expenses including your work vehicle tools and supplies. You too would carry the cash flow of those expenses. You would be entitled to capital cost allowances from that cash flow. To put it more simply, you would be holding funds from your income that CRA and the IRS will not be asking for later on in the year. You could use those expenses to pay the home mortgage down and draw from your home equity for investment purposes. These tax benefits come to you as a self-employed business owner.
You are also a wage earner so the wages portion of your income will be subject to tax payments on Employee deductions. You too must use all the tax deductions, which an employee can claim. You should maximize your RRSP 401K and ROTH Retirement Savings Deductions, which our various governments allow. Not only will they lower your tax bill, but they also provide a savings account to take care of your needs in later years.
My advice to make the most of tax deductions allow you to pay a lower level of taxes so you keep the difference to pay down your mortgage and invest. Plumbers, Electrician Contractors, you enjoy a rather high paying profession. If you are an electrician you are rewarded for the dangerous nature of your work. As for you the Plumber, your high income is often equated to that of a medical doctor. These higher incomes allow you to put some money away by paying down your mortgage. Our Smart Mortgage Plan, SMIP uses scientific financial techniques to reduce the mortgage principal rapidly. When the principal is reduced, we are able, reinvest that money again with the help of the financial institutions we have cultivated specifically for that purpose. In times of feast, don't waste all of your money in excessive living. Put some away by paying the mortgage down. You can get at it later as an investment with superb tax benefits. And you will win freedom from mortgage payments in record time.
As Masons, as Carpenters, Framers and Labourers too, your income is lower than those higher priced Contractors. And you work harder! Your group includes Journeyman Ticket holders as well as sub-contractors. You are more of an employee than electricians and plumbers. Usually, the Contractor hires you and would likely take you from one job to the next under his employ. It is the loyalty of your Contractor that saves you from too much seasonal or periodic employment. You do a good job for your boss. In turn, that Contractor rewards you with steady work.
As an Employee, you have a T4. You have those huge numbers of taxes deducted at source that the Contractor must send on to the IRS and to CRA by law. I will bet you never looked to see how much money they took from your pay to send to the government as "Deductions at Source". You in turn have the ability to claim those deductions if you follow good advice that would get you all of the tad deductions you are entitled to.
Because your work comes in cycles, it is even more important for you to pay your mortgage down fast with the extra pay you receive in boom times. You could always take it back when times are tough. The important message is that you could regard your fast mortgage payment as a deposit in a savings account. I just explained to Contractors how these deposits to pay off the mortgage fast carry greater benefits for returns and tax advantages.
Like the contractor, a Journeyman too could take on a sub-contract to supplement your income. This could be a job you complete on a Week Ends, Evenings or on a Holiday. My advice is to report these side jobs as income. When you report them honestly, they allow you added tax deductions, as if you were a Contractor. When you report that extra job, you could then deduct your tools and your vehicle as legitimate deductions. Even your cell phone, your costs for storing tools could now count because you now have a small sub- contracting business.
I share these insights so you would understand that it takes little more than the regular mortgage payments you make right now in order to reap the huge benefits of the Smart Mortgage Investment Plan. If your credit score is fair, if your income is steady over a period of three years and more. We can put this plan to work for you. We use your existing mortgage payments. That is mainly what we require. Then we introduce you to our financial contacts. And we recommend you for their special programs. They take our recommendations and work with you. Even though no extra dollars come from you really, we find a way to increase those monthly payments on the mortgage. We guide you to the maximum tax deductions you are entitled to. You get bigger tax refund checks because you follow our advice. We don't recommend that you should rush out to spend it the same week it comes in. No. You pay down your mortgage principal first. Then you take it back and spend it if you must. Read: Why Term Life Insurance Policies are the Best
Construction is Action:
As trades and construction workers, you know more than most that if you sit all day and look at the plans, the house never gets built. Take that Action Lesson and do something with this new knowledge. You should know that it works because we are talking about recovering your money from the Tax Man. The Smart Mortgage/Mortgage Freedom plan will show you how to take back some of the interest costs you pay as profits. The Smart Mortgage Investment Plan will invest both the taxes and the excess profits to make those dollars work for you. We are talking about taking back your very own money. Success here does not mean you win money in the lottery or you guessed the right stock or you gamble on a high-risk market play. Success means working our knowledge of existing government programs so you take back the money you now give away.
Remember now. I gave only so much information so that you will know that this is really possible. You need a professional to pry away the huge dollars from those greedy Bankers!!