Termes, formules et concepts financiers utilisés dans les calculateurs et l'analyse de scénarios
Maximum annual rental income assuming 100% occupancy. This is the theoretical maximum before accounting for vacancy.
Expected income loss due to vacancy between tenants. Typically 1-5% for residential properties in strong markets.
Actual expected rental income after accounting for vacancy. This is the realistic income used in cash flow projections.
Annual costs to operate the property, excluding mortgage payments.
Annual income after operating costs but before mortgage payments. This is the property's earning power independent of financing.
Cash received after selling a property and paying off the mortgage, realtor commission, and closing costs.
Fee paid to real estate agents on sale. Traditionally 5% split between buyer and seller agents, though rates are now more negotiable.
Total annual mortgage payment including both principal repayment and interest charges.
Interest portion of annual mortgage payment. Tax-deductible for rental properties, reducing taxable income.
Fee charged by a lender when you break a fixed-rate closed mortgage early (e.g., selling or refinancing before the term ends). Canadian lenders charge the greater of three months of interest at your contract rate, or the Interest Rate Differential (IRD). Variable-rate mortgages typically use three-month interest only.
Compensates the lender for the revenue they lose when you break a fixed-rate mortgage while current rates are lower than your contract rate. The 'Lender's Posted Rate' is the rate the lender currently offers for a term matching your remaining term. If rates have risen (posted rate ≥ contract rate), IRD is zero and the three-month interest penalty applies instead.
The remaining principal on your mortgage at the time you break the contract. This is the amount the penalty is calculated against, not your original mortgage amount.
The fixed annual interest rate on your mortgage, locked in when you signed or renewed your mortgage term. This is the rate you agreed to pay for the duration of the term.
The interest rate your lender currently offers for a term matching your remaining term. Used to calculate the Interest Rate Differential. For example, if you have 3 years left on a 5-year term, this would be your lender's current 3-year fixed rate. Each lender sets its own posted rates, so check with your specific lender.
Total borrowed from HELOC for investment purposes. This debt is tax-deductible because the funds are used to earn income.
Annual interest paid on HELOC. Tax-deductible when borrowed funds are invested in income-producing assets (e.g., dividend stocks).
Upfront cash required to purchase a home. Minimum 5% on first $500K, 10% on $500K-$1.5M. Properties over $1.5M require 20% minimum (not eligible for CMHC insurance).
Total time to repay the mortgage in full. Up to 25 years for most insured mortgages; first-time buyers (any property) and new-build purchases (any buyer) qualify for 30-year insured amortization since Dec 2024. Conventional (20%+ down) allows up to 30 years. Longer amortization = lower payments but more interest.
Income subject to tax. Mortgage interest is tax-deductible, but principal payments are not. Same calculation as Net Rental Income, shown here in tax context.
Tax owed on rental income at your marginal rate. Calculated at portfolio level, not per-property.
Income tax payable to the federal government based on Canada's progressive tax brackets.
Income tax payable to the provincial government based on your province's tax brackets.
Average tax rate paid on all income. Lower than marginal rate because early income is taxed at lower brackets.
Tax rate applied to your next dollar of income. Determined by your highest tax bracket. Useful for evaluating whether additional income is worth pursuing.
Salary, wages, and other employment earnings. Fully taxable at your marginal rate.
Net rental income after deducting operating expenses and mortgage interest. Fully taxable at your marginal rate.
Interest from GICs, savings, and bonds. Fully taxable at your marginal rate - the least tax-efficient income type.
Profit from selling a capital asset (property, stocks, etc.). Only 50% of the gain is included in taxable income (the proposed 2/3 rate was cancelled March 2025). Exemptions like the Principal Residence Exemption or LCGE may reduce the taxable portion further.
Tax savings from deducting HELOC interest. Reinvested to accelerate mortgage paydown or grow the portfolio.
Provincial/municipal tax paid when purchasing property. Rates vary by province and are applied on a tiered bracket system. Toronto has an additional municipal LTT.
Rebate on land transfer tax for first-time buyers. Ontario: up to $4,000. Toronto municipal: up to $4,475. BC: full exemption up to $835K, partial exemption $835K-$860K (2025).
The fraction of a capital gain that is taxable. Currently 50% for individuals (the proposed 2/3 rate was cancelled in March 2025). Only the included portion is added to taxable income.
Exempts all or part of the capital gain on your principal residence from tax. If designated for all years owned, the gain is fully exempt. The +1 in the formula allows coverage for the year of sale. Only one property per family can be designated per year.
Shelters up to $1,250,000 (2025) of capital gains on qualified small business corporation (QSBC) shares or qualified farm/fishing property from tax. The exemption is cumulative over your lifetime and indexed to inflation.
Net income from property after interest expense. Principal is excluded since it builds equity. Same calculation as Taxable Income, shown here in cash flow context.
Cash remaining after paying full mortgage (principal + interest), before income taxes. Can be negative in early years.
Actual cash available to the investor after all operating expenses and taxes. Expenses reduce cash flow but are not tax-deductible.
Running total of all cash flows after taxes since investment start. Shows how much cash you've accumulated or depleted.
Running total of all cash flows before taxes since investment start. Shows cumulative cash position before tax considerations.
Current market value of the property based on appreciation assumptions.
Remaining amount owed on the mortgage loan.
Your ownership stake in the property. Grows as property appreciates and mortgage is paid down.
Total wealth from the investment including property equity and accumulated cash. Per-asset balance sheets use pre-tax Cash Position; portfolio income statement has post-tax Cash Position. See docs/architecture/financial-model.md Section 6.
Sum of all asset values (property value, investment value) plus accumulated cash position, before subtracting liabilities. At per-asset level, the Cash Position used here is pre-tax.
Current market value of equity or bond holdings.
Total value of investments purchased with HELOC funds. Grows through new contributions, capital appreciation, dividends, and reinvested tax refunds.
Your net position from the Smith Manoeuvre strategy. Positive when portfolio growth exceeds HELOC debt.
Total percentage return on your initial investment (down payment + closing costs).
The discount rate that makes NPV of all cash flows equal zero. Accounts for timing of all cash flows, not just start and end values. More accurate than CAGR for investments with ongoing cash flows.
Annual return if property were purchased with cash (no mortgage). Used to compare properties independent of financing.
Annualized return if you sold at this year. Based on cash flows before taxes and equity at sale. A negative IRR in early years is normal due to closing costs.
Return generated on money borrowed through HELOC. Shows the effectiveness of leveraging tax-deductible debt for investment.
Growth of an investment where returns are reinvested to earn additional returns. The foundation of long-term wealth building: time is the most powerful factor.
Investment return after adjusting for inflation. Shows actual purchasing power growth. A 7% nominal return with 2% inflation yields ~4.9% real return.
How many times your money has grown. A 3× multiple means $100K became $300K. Useful for quickly communicating total growth over long horizons.
The annual withdrawal percentage that would deplete a portfolio to zero over a given time horizon. Related to the 4% rule for retirement planning.
Annual interest earned from GICs or savings deposits.
Annual interest payments received from bonds.
Annual dividend payments received from stocks or ETFs.
The maximum amount you can deposit into a registered account in a given year. Determined by annual limits, carry-forward, and prior contributions.
Unused contribution room from previous years that accumulates indefinitely. Available for TFSA (since 2009), RRSP (since 1991), and FHSA (max 8 years).
Amount contributed beyond available room. TFSA excess is penalized at 1% per month; RRSP allows a $2,000 buffer before 1% monthly penalty.
The federal contribution limit for the Tax-Free Savings Account, set annually and indexed to inflation in $500 increments. Check CRA for the current year's limit.
Maximum RRSP contribution for the year. Based on 18% of prior-year earned income minus pension adjustments, up to the annual dollar limit.
Reduces RRSP room to account for benefits accruing in an employer pension plan. Reported on your T4 slip.
Maximum total contributions to a First Home Savings Account: $40,000 lifetime, $8,000 annual, with up to $8,000 carry-forward. Must be used within 15 years of opening.
Federal matching grant on RESP contributions. 20% on the first $2,500 contributed per child per year. Lifetime maximum of $7,200 per beneficiary.
Federal grant for RESP beneficiaries from low-income families. $500 initial + $100/year (up to 15 years), no contributions required. Maximum $2,000 per child.
Lifetime contribution limit of $50,000 per beneficiary. No annual limit, but CESG matching only applies to the first $2,500/year.
Federal matching grant on RDSP contributions, up to 300% match depending on family income. Maximum $3,500/year, $70,000 lifetime per beneficiary.
Federal bond for low-income RDSP beneficiaries. Up to $1,000/year, $20,000 lifetime. No contributions required: deposited directly by government.
Mandatory conversion of RRSP to a Registered Retirement Income Fund by December 31 of the year you turn 71. Minimum annual withdrawals are required based on age.
CRA-mandated minimum annual withdrawal from a RRIF. For ages 55-70 the factor is 1/(90-age); from 71 onward, prescribed percentages apply (e.g., 5.28% at 71, rising to 20% at 95+). You can elect to use a younger spouse's age, lowering the minimum.
Tax withheld at source on RRIF withdrawals exceeding the annual minimum. Rates: 10% on excess up to $5,000, 20% on $5,001-$15,000, 30% over $15,000. Quebec has separate lower federal rates plus provincial withholding. No withholding on the minimum amount.
New RRSP contribution room generated from the prior year's earned income. Unused room carries forward indefinitely.
When you withdraw from a TFSA, that room is restored on January 1 of the following year. Unlike RRSPs, withdrawals do not permanently reduce contribution space.
CESG and CDSG use income-based matching tiers. Low-income families receive enhanced matching rates (e.g., 40% on the first $500 of RESP contributions for CESG).
Combined net income (Line 23600) of both spouses/partners, used to determine eligibility and reduction rates for most federal benefits including CCB, GST/HST credit, and CWB.
The income range over which a benefit or credit is gradually reduced to zero. Phase-outs apply at specified rates as family income exceeds threshold amounts.
Tax-free monthly payment for families with children under 18. Maximum amounts vary by child age (higher for under 6) and are indexed to inflation each July. Reduced as adjusted family net income rises above the first threshold.
Maximum annual CCB entitlement per child before income-based reduction. Higher for children under 6 than 6-17. Indexed to inflation each July; check CRA for current amounts.
Additional tax-free monthly supplement for families caring for a child eligible for the Disability Tax Credit. Indexed to inflation; reduced at higher incomes.
Monthly pension for Canadians aged 65+. Full pension requires 40 years of Canadian residence after age 18. Partial pension available with 10+ years.
High-income seniors must repay part or all of OAS. Recovery tax of 15% on net income above an annually indexed threshold. Full clawback occurs at a higher income level; 75+ seniors have a higher clawback point because they receive 10% more OAS.
Deferring OAS past 65 increases payments by 0.6% per month, up to 36% more at age 70. Beneficial if you expect to live past ~81 or have high current income.
Refundable tax credit for low-income workers. Phases in at 27% of working income above $3,000, up to a maximum benefit amount that varies by family type.
The CWB increases as working income rises above $3,000, encouraging workforce participation. The phase-in rate is 27% of each additional dollar earned.
The CWB decreases at 15% of adjusted family net income above the phase-out threshold. Thresholds differ for single individuals vs families and are indexed annually.
Additional CWB amount for workers eligible for the Disability Tax Credit, with its own phase-in and phase-out thresholds. Indexed annually.
Quarterly tax-free payment to offset GST/HST for low-to-modest income Canadians. Based on tax return filing; no application needed.
Additional GST/HST credit amount for single individuals with no children. Phases in at 2% of net income above a threshold, up to an indexed maximum.
Quarterly tax-free payments that offset the federal carbon price. Amount varied by province. Program ended in 2025 following repeal of the consumer carbon tax; final payment was April 2025.
20% top-up to the Canada Carbon Rebate for residents of small and rural communities. Program ended with the CCR in 2025.
Monthly retirement pension funded by employee/employer contributions throughout working years. Amount depends on how long and how much you contributed. Standard start age is 65; can start early at 60 (reduced 0.6%/month) or defer to 70 (increased 0.7%/month).
Pension adjustment for starting CPP before or after 65. Early (60-64): reduced by 0.6% per month (max -36% at 60). Deferred (66-70): increased by 0.7% per month (max +42% at 70). The adjustment is permanent.
The maximum earnings on which CPP contributions are calculated each year. Set annually by the federal government and indexed to average wage growth. Earnings above YMPE do not increase your CPP pension.
Percentage of gross income needed for housing costs. Must be ≤ 39% for insured mortgages (individual lenders may apply stricter limits). Calculated using the stress test rate.
Percentage of gross income needed for all debt payments including housing. Must be ≤ 44% for insured mortgages (individual lenders may apply stricter limits).
The qualifying rate used to determine if you can afford mortgage payments. All federally regulated mortgages must pass the higher of 5.25% or contract rate plus 2%.
Required for down payments less than 20%. Premium ranges from 2.80% to 4.00% of the mortgage amount, added to the loan. Protects the lender, not the buyer.
Insurance premium percentage based on loan-to-value ratio. 90.01-95% LTV (5-9.99% down): 4.00%, 85.01-90% LTV (10-14.99% down): 3.10%, 80.01-85% LTV (15-19.99% down): 2.80%. Applied to the mortgage amount.