Stop. Are you thinking of paying off or paying down your rental property mortgage? I'll tell you why this is a really bad idea.

In Canada, our homes, our primary residences, are tax sheltered, which means we do not pay tax when we buy or sell them at a higher value. At the same time, we cannot deduct expenses such as property taxes, mortgage interest, heat, hydro and any other operating expenses.

On the flip side, rental properties are investment vehicles, and we get to deduct expenses in operating that specific rental investment property. For example, we can write off the interest portion of the mortgage. We can write off the heat, hydro, property taxes, and any operating expenses incurred in running that specific rental property.

Paying off your rental property's mortgage first is a bad idea, because you will decrease your tax write offs. It is more prudent to pay off your primary residence first and then pay off the rental property for the simple reason, if you pay off your rental property first, you will decrease your tax write off and increase your taxable income, which means you're going to pay more taxes.

Disclaimer: I am not an accountant. Please consult with a professional accountant that can give you advice based on your unique situation.

Until next time, happy investing.