Cash Damming Strategy Help

[Daniel B.]

Hi all,

I'm trying to implement a cash damming strategy to convert some of my personal property mortgage into tax deductible debt, and I'm looking for some guidance. I have a few rentals that have LOCs associated with them and a personal property which was just purchased and does not have an LOC.

What I do currently:

1. Allocate a bank account from which to pay all expenses associated with the rentals.
2. Deposit all rents into that account and use it to pay rental expenses
3. At the end of the month withdraw whatever money was left over to bring my balance back down to $10k and use that to pay down my personal mortgage.

What I think I should do for cash damming:

1. Allocate a bank account from which to pay all expenses associated with the rental (Done)
2. Deposit all rents into my personal account and use them to pay my personal mortgage
3. At the end of the month transfer whatever money was spent in the rental account back in from my the rental LOC to bring my balance back up to $10k
4. I can now deduct the interest on the LOC which I'm not longer paying on the personal property. Eventually on refinance I roll the LOC into the rental mortgage and the maneuver is complete.
   

My main questions are:

1. Does this make sense? Are there any pitfalls I'm missing?
   
2. My rental chequing account currently has a balance of $10k. Should I cash out this amount and replace it with $10k from the LOC or keep the "clean" cash in there?
3. Is the principle I pay on the rental mortgage considered an eligible "expense" (just like everything else needed to service the rental) that I can use the LOC to pay for and deduct the interest for?