Is Mortgage Interest Tax Deductible in Alberta?

Can you Write Off Mortgage Interest in Alberta?

It depends—For mortgage interest to be tax-deductible in Alberta, the property being financed must be used for generating income.

When it comes to tax season, one of the most common questions Alberta homeowners and real estate investors ask is: “Can I write off my mortgage interest?” The short answer? It depends on how the property is used — and how strategic you are with your borrowing.

In most cases, mortgage interest is not tax-deductible on your primary residence unless you’re generating income from it. But there are exceptions — and powerful strategies that savvy Albertans use to maximize deductions, especially with rental properties and reinvestment strategies.

Let’s break it down clearly.

What Qualifies for a Mortgage Interest Tax Deduction?

To claim a tax deduction on mortgage interest in Alberta, two key things usually need to be true:

1. The borrowed money was used to buy, build, or improve the property.
2. The property is used to generate income — either through rental, business activity, or a reinvestment strategy.

This means simply living in your home doesn’t make the interest deductible. But using that property (or its equity) for income? That’s where the opportunity lies.

Can You Deduct Mortgage Interest from Your Primary Residence?

Typically, no — unless part of your home is generating income.

Here’s when deductions might apply:

• You run a business from home and that space is exclusively used for business.
• You rent out a portion of your home (like a basement suite or Airbnb guest room).
• You use a reinvestment strategy, like borrowing against your home’s equity to invest — where 100% of that interest may be deductible.

Is Mortgage Interest Tax Deductible on Rental Properties in Alberta?

Yes — and this is where things get interesting.

If your property is primarily used to generate rental income, the mortgage interest is generally tax-deductible. Whether it’s a long-term rental in Calgary or a short-term Airbnb in Canmore, the portion of your home used for income determines what you can write off.

You can also claim additional costs like:

• Appraisal fees
• Legal fees related to the mortgage
• Interest on loans used to improve the rental property

Can You Write Off Mortgage Interest If You Work From Home?

It depends on how you work:

• Self-employed? You may claim a portion of your mortgage interest if your home office is your primary place of business and is used exclusively for work.
• Working remotely for an employer? Sorry — the CRA doesn’t allow mortgage interest deductions in this case, even if you work from home.

Always consult a tax professional or mortgage expert before making any claims.

Strategy Spotlight: The Reinvestment Advantage

Many Alberta homeowners use a reinvestment strategy to make their mortgage interest tax-deductible — by:

1. Borrowing against their home equity (via a HELOC or refinance).
2. Investing that money into income-generating assets (e.g., stocks, rental properties).

When structured correctly, this allows them to write off 100% of the interest on that borrowed amount — a powerful wealth-building move.

Key Terms to Know

• Primary residence – The home you live in most of the time.
• Reinvestment strategy – Using borrowed equity to invest, making interest potentially deductible.
• Rental income – Earnings from tenants or short-term guests.
• HELOC – Home Equity Line of Credit; a revolving loan secured by your home’s equity.
• Self-employed deductions – Expenses you can claim when working for yourself, including part of your home expenses.
• Exclusive use rule – CRA guideline that allows deductions only when a space is used solely for business purposes.
• Short-term rental – Typically less than 30 days; may have different tax implications than long-term rentals.

Frequently Asked Questions

Is mortgage interest ever 100% deductible in Alberta?
Yes — especially with investment properties or reinvestment strategies where all borrowed funds are used to generate income.

How much mortgage interest can I deduct for a partial rental?
You can deduct a proportional amount based on square footage or use — e.g., 30% if one-third of the home is rented.

Can I deduct interest if I refinance my home?
Only if the funds from the refinance are used for income-generating purposes. Simply refinancing to lower your rate doesn’t make interest deductible.

What if my business only uses a small part of the house?
You can only claim interest on the portion of the home used exclusively for business. Shared or dual-use spaces don’t qualify.

Can I claim mortgage interest on a second home?
Only if it’s a rental property or used to generate income — not if it’s a personal vacation home.

This section will include FAQ schema on final export.

Final Thoughts: Make Tax Time Work for You

If you’re a homeowner or investor in Alberta, understanding when and how mortgage interest is tax-deductible can unlock serious savings — and smarter financial planning. Whether you’re self-employed, managing a rental, or exploring reinvestment strategies, we’re here to help.