The Cash Damming calculator — how fast can your expenses retire your mortgage?
Pay your rental or business expenses from a line of credit; send the cash they would have used against your mortgage instead. Your non-deductible mortgage dies early; a deductible balance takes its place. This runs both lives of your debt — with and without the dam — to full debt-freedom, in exact cents, and tells you the honest difference. Which account each expense has to leave from is the part the projection assumes and the record has to show.
What is cash damming?
Cash damming is a Canadian debt-conversion technique for people with business or rental income. Deductible-purpose expenses are paid from a dedicated line of credit while the cash they would have used prepays the personal mortgage, so non-deductible mortgage debt is replaced by deductible line-of-credit debt without any new investment risk.
Your numbers
Two lives of the same debt
Assumptions & method (read this — it's where calculators differ)
- Mortgage compounding. Canadian fixed mortgage: semi-annual compounding, monthly factor (1 + r/2)^(1/6) − 1.
- Facility. Line of credit compounds monthly (annual rate / 12).
- Refund timing. Tax refunds on deductible LOC interest are credited monthly at the marginal rate — the same smoothing as the Smith Manoeuvre model.
- Fair baseline. Plain amortization of the same mortgage with no dam. The advantage is total interest saved: baseline mortgage interest minus the dam scenario net interest (mortgage + LOC interest, less refunds).
- Not modeled: Investment-income taxation along the way (dividends, distributions, realized gains); Account, fund, and borrowing fees; Rate changes and prepayment changes over the projection horizon; Accelerated variants (refund-prepay, dividend-prepay); Québec abatement and province × bracket tax detail (single flat marginal rate is used).
A worked example: the default scenario
For a $400,000 mortgage at 4.50% with 22 years of amortization remaining, $3,000 a month of deductible-purpose expenses routed through a 6.45% line of credit, and a 43.41% marginal rate, the mortgage is retired in 7.3 years instead of 22. The line of credit peaks at $261,000 — that is the non-deductible debt converted into deductible debt — and pays $197,339 of deductible interest, returning $85,665 in refunds. All debt — mortgage and line of credit — is gone in 21.3 years. Net interest to debt-freedom is $180,673 with the dam against $228,419 without it, a difference of $47,746. The level mortgage payment is $2,380 a month.
| Year | Mortgage (dam) | LOC (deductible) | Mortgage (baseline) |
|---|---|---|---|
| 1 | $352,302 | $36,000 | $389,047 |
| 2 | $302,433 | $72,000 | $377,595 |
| 3 | $250,296 | $108,000 | $365,623 |
| 4 | $195,785 | $144,000 | $353,105 |
| 5 | $138,794 | $180,000 | $340,018 |
| 6 | $79,210 | $216,000 | $326,335 |
| 7 | $16,914 | $252,000 | $312,030 |
| 8 | $0 | $253,031 | $297,073 |
| 9 | $0 | $240,418 | $281,436 |
| 10 | $0 | $226,968 | $265,088 |
| 11 | $0 | $212,623 | $247,995 |
| 12 | $0 | $197,326 | $230,125 |
| 13 | $0 | $181,012 | $211,441 |
| 14 | $0 | $163,614 | $191,908 |
| 15 | $0 | $145,061 | $171,485 |
| 16 | $0 | $125,274 | $150,133 |
| 17 | $0 | $104,173 | $127,809 |
| 18 | $0 | $81,670 | $104,470 |
| 19 | $0 | $57,672 | $80,068 |
| 20 | $0 | $32,079 | $54,556 |
| 21 | $0 | $4,786 | $27,883 |
| 22 | $0 | $0 | $0 |
Computed at build time by @acru/strategy-sim under assumption set dam-2026.1 — the same engine, and the same versioned methodology, the interactive calculator above runs on.
Your accountant reconstructs this once a year. The dam runs every week.
Cash damming is a bookkeeping discipline before it is a strategy: expenses out of the line, revenue against the mortgage, each flow traceable afterwards. Join the waitlist and we will send you a permalink to this exact projection.
Keep this projection.
Join the waitlist and we will email you a permalink to the exact projection on this page — the inputs you entered, restored. You will also hear when the record-keeping platform behind it opens. Nothing else, and you can stop the mail from any message.
The address is used for the list you are joining and nothing else — what happens to it is set out in the privacy policy, and the terms these pages are offered under cover the rest of the site.
Cash damming — questions this calculator raises
Who can use cash damming?
Owners of rental property and the self-employed or incorporated with regular deductible expenses. Employees without business or rental income generally cannot: there must be genuine deductible-purpose spending to route through the line of credit, and personal expenses never qualify.
Is cash damming legal in Canada?
The structure rests on the direct-use tracing principle of paragraph 20(1)(c) and was considered by the Supreme Court in Singleton v. Canada. What the CRA examines is the tracing: the line of credit must fund only deductible-purpose expenses, without commingling. The records are the strategy.
My line-of-credit rate is higher than my mortgage rate — does this still work?
Sometimes. Deductibility at your marginal rate can outweigh a modest spread, but not always — which is why this calculator runs both scenarios to zero debt and shows a negative number when the dam loses. Enter your own spread above and read the sign.
What's the difference between cash damming and the Smith Manoeuvre?
The Smith Manoeuvre borrows to invest, creating investment debt and a portfolio alongside it. Cash damming re-routes expenses you already have, converting debt faster with no new investment risk. Many households run both, and they compound.
Model the other side of it in the Smith Manoeuvre calculator.