← Rental cash damming · Other strategies
Business cash damming
Let your business income pay down your home mortgage
If you’re self-employed and not incorporated, your business income can go onto your home mortgage while your business expenses are paid with borrowing that may be tax-deductible. Your cash flow stays the same; your debt slowly shifts to the side that works for you.
How it works
The same idea as rental cash damming, with your business in place of a rental.
Separate the money
Your business gets its own bank account, and a line of credit attached to your readvanceable mortgage is used only for business expenses.
Income goes on the mortgage
As your business earns money, it goes onto your home mortgage instead of sitting in the business account to pay the bills.
Borrow for the bills
Your business expenses are paid from the line of credit. Because that borrowing is used to earn business income, its interest may be deductible.
Tax time
The deductible interest lowers your taxes. Year by year, more of your home mortgage becomes business borrowing.
Tax Savings Preview
About two minutes, and round numbers are fine. You’ll see a range, not a promise.
Where should we send your estimate?
Your results show on the next screen, and we’ll email you a copy.
We use your information only to share your estimate and, if you agree above, occasional updates. See our privacy policy.
Assumptions we used
The numbers you entered are your own. These are the assumptions we added, and your Blueprint sets each one to your situation.
Want your custom Blueprint?
You have your range; your Blueprint fine-tunes it. Start with a free strategy call. Once the $500 Blueprint fee is paid, we go through your financial details in more depth and build scenarios around your goals.
- Your overall projected net wealth improvement, with your actual business expenses month by month
- Side-by-side scenarios: putting your tax savings on your mortgage, or investing them at a rate of return you choose
- Every assumption talked through with you and set to your situation
- Anything that needs review before you start, like a past refinance or your mortgage structure
For illustration only. The range uses the numbers you entered and the assumptions listed above. Results aren’t guaranteed and will change if rates, property values, income or tax rules change. This is not advice, an official Blueprint or an offer of credit.
What it could look like
An illustration using the same Tax Savings Preview math. Not a real client.
Illustrative example
A sole proprietor with $36,000 a year in business expenses
The starting point
Alex has a $400,000 home mortgage at 4.45% with 25 years left, and runs an unincorporated business with about $3,000 a month in deductible expenses. With a marginal tax rate of about 43% and a 5% line of credit, here’s how it plays out.
Each month
About $3,000 of business income goes onto the home mortgage, and the same $3,000 is borrowed back from the line of credit to pay the business’s bills. The line of credit’s interest is added to its balance.
The result
Alex’s home mortgage is fully converted to business borrowing in about 7.6 years. Keeping the regular payment going afterward, and putting each year’s tax savings toward the line of credit, Alex is debt-free in about 23 years instead of 25.
What to know before you start
Business cash damming rewards good bookkeeping.
- It’s for unincorporated businesses. Sole proprietors, the self-employed and partners in a general partnership can use it. If your business is incorporated, its expenses belong to the corporation, so this version doesn’t apply.
- Only real business expenses count. Borrowed money has to go to expenses that earn business income, and every dollar needs to be traceable. Personal spending from the line of credit muddies your deductions.
- Your business needs steady expenses. The strategy moves only as fast as your monthly expenses. Small or irregular expenses mean a slower conversion.
- Your borrowing grows. The line of credit balance goes up over time, and its rate is usually variable.
- Results aren’t guaranteed. Your accountant confirms which expenses qualify and how the interest is claimed.
How we work together
We start free, and you decide at every step whether to keep going.
- 1
See your range
Try the Tax Savings Preview above.
- 2
Free strategy call
We get to know your situation and see whether business cash damming is a fit.
- 3
Your custom Blueprint
$500. Scenarios built on your real numbers, reviewed with you on a call.
- 4
Implementation
If you go ahead, your $500 is credited toward implementation.
Questions
Does this work if I’m incorporated?
Not in this form. A corporation’s expenses are the corporation’s, not yours, so your business income can’t be routed onto your personal mortgage the same way. There are other strategies for incorporated owners, and we can talk through them on a free strategy call.
Which expenses can I pay from the line of credit?
Expenses you incur to earn business income, such as rent, supplies, software, subcontractors and vehicle costs at the business-use share. Your accountant confirms the list for your business.
Can I combine it with rental cash damming?
Yes. If you also own a rental, both can run side by side, with separate tracking for each.
Is it legal?
Yes. Under paragraph 20(1)(c) of the Income Tax Act, interest is generally deductible when borrowed money is used to earn income from a business or property. The CRA’s guidance in Income Tax Folio S3-F6-C1, Interest Deductibility looks at how the borrowed money is currently being used, which is why careful tracking matters.
Do I need a special mortgage?
Yes, a readvanceable mortgage with at least 20% equity. Front Porch Consulting doesn’t arrange mortgages; your Implementation Report includes instructions for your lender or mortgage professional.
Other strategies
Every situation is different, and some of these can be stacked together. We’ll talk through which ones fit on your free strategy call.
Rental cash damming
Your rent pays down your home mortgage while the rental’s bills are paid with borrowing that may be tax-deductible.
StrategyDebt swap
Use non-registered investments to pay down your mortgage, then borrow to reinvest, so the interest may be deductible.
StrategyCash flow diversion
Keep investing the same amount each month, routed through your mortgage so your borrowing becomes deductible.
StrategyOffset mortgages
An all-in-one account where the money you keep in it lowers the balance you pay interest on, every day.
Is your business a fit?
Bring your T2125 numbers and we’ll look at it together.
Privacy policy
Last updated November 2026.
Front Porch Consulting ("Front Porch", "we") respects your privacy. This policy explains what personal information we collect through this website and how we use it.
What we collect. When you use an estimator that asks for your details, we collect your first name, email address, optional phone number, the numbers you enter (such as home value, mortgage, rent, business income and expenses, and income), your estimate results, and whether you agreed to receive emails. When you book a call or become a client, we collect the information you choose to provide.
How we use it. To show and share your estimate, respond to your questions, assess whether our services fit your situation, and deliver services you engage us for. If you opt in, we may email you about mortgage strategies; you can unsubscribe at any time.
Sharing. We don't sell your information. We share it only with service providers that help us run our business (such as website, form, scheduling and file storage tools), with professionals you ask us to work with, or where required by law.
Storage and security. We use reasonable safeguards to protect your information. Some of our service providers may store information outside Canada.
Your choices. You can ask to see, correct or delete the personal information we hold about you, or withdraw your consent to emails, by contacting us.