Please visit us at oneillrealestate.ca or leave a comment. With the current US housing market having entered the doldrums, there has been talk of a possible cataclysmic bust up here. George O’Neill believes an American-style mortgage market crash is unlikely in Canada, and here are his three reasons why. Borrower Default In the United States, mortgages are “nonrecourse” – people who default on their mortgages can simply walk away from their homes with no further financial obligation. In Canada we have full recourse mortgages. People cannot walk away; they still have the obligation to pay the mortgage debt. They can repay this debt by selling the property. The lender can end up selling their property, but if the lender is small on the money afterwards they will still come to the borrower for the difference. Tax Laws In the USA, people can deduct their mortgage interest from their taxes, but in Canada we cannot, at least for our primary residences. This unfortunately encourages some folks in the US to use their homes as piggy banks and leveraging up their houses. When property values were climbing this resulted in nice tax breaks, but as soon as property values fell this became a problem. In Canada some financial advisors claim homeowners can implement a so-called “Smith Manoeuvre” to make your primary residence tax deductible through a series of financial transactions. I am not sure it is for everyone and I believe it is still doubtful whether the Canadian Revenue …