October 10, 2014
While I generally recommend using a lump sum like a tax
refund or mid-year bonus to pay down your home loan, the
situation is a bit different for investors.
For home owners, the loan interest isn’t tax deductible so it
makes good financial sense to pay off the loan sooner. As a
landlord however you can usually claim the loan interest as
a tax deduction, and this removes the urgency to pay off the
That said, using the money to complete some
minor improvements or any repairs on a rental property
can enhance your tax deductions through depreciation or
maintenance expenses. It’s a way of using this year’s tax
refund to beef up next year’s tax refund – though always
speak with your accountant for tailored advice.