Cash refinance? Tax free?

[Alex Cons]

Hello Canadian BP’ers, Looking on some feedback regarding a strategy I stubbled upon. If you bought a house a year for 10 years (assuming cash flow positive as well), and on the 11th year refinanced the 1st house to pull out a chunk as a yearly salary, and then refinance the 2nd house on the 12th year for a yearly salary, etc. Is this a viable strategy? Is refinancing tax free? How easy/difficult is it to refinance in Canada?

[Roy N.]

@Alex Cons

Firstly, you would be withdrawing funds from secured financing (LoC or mortgage), which would need to be repaid - at a cost.  Monetarily, the strategy would only make sense (and cents) if the interest you paid on the withdrawn funds (over the entire life of the debt), or, in the event you can deduct the future interest as an expense, the lost opportunity, does not exceed the taxes you would have paid on that amount if earned as a salary.   If you are trying to build equity (grow wealth), the strategy would be a drag on your efforts.

From perspectives other than growing wealth - such as retirement or taking a year off with the arrival of a new child or the trip of a lifetime - there may be quality-of-life benefits which justify the approach.