hello,
canadian here. i’m wondering how people use margin to leverage debt?
i am not considering using margin on my main investing accounts but thought i could open up another side account to try it out.
i was thinking of putting say, $10,000 into an ETF like JEPQ which yields 10% and the margin rates are currently 5% for myself. so the difference of 5% is basically just “free money”, no?
of course i would only use a small amount of margin. lets say with $10,000 of my own money, around $1000 of margin for a total of $11,000 invested into something like JEPQ.
im mainly concerned with how these things are taxed? if its taxed as regular foreign income ina non registered account then do i pay tax only on the profits (10% yield - 5% rate = 5% profit)?? do i get a deduction in my income tax for the interest i am paying to borrow to invest?
for example, if i borrowed $1000 against 10k to make 5% profit, thats only $50/year profit. around $4 a month. this doesn’t even seem worth it to borrow. and then am i paying tax on the full 10% ? ($100 that i would make) or only on the $50 profit… ?