RRSPs and loans

Interest on loans taken out to invest in an RRSP is not deductible. Therefore, your investments should be structured to take maximum advantage of the interest deductibility rules.

Tax tip: Consider cashing in an existing investment to contribute to your RRSP and then, if you wish, borrowing funds to acquire another investment that is held outside your registered plan. This way, you receive a deduction for your RRSP contribution, and the interest on the loan borrowed for investment purposes should also be tax deductible provided certain conditions are met (see topic 150).