RRSP, TFSA, FHSA, RESP: How to Choose When You Cant Do It All

If you’re using cash damming with your rental property, you already know how powerful the strategy can be. By paying expenses through a HELOC and deducting the interest, you generate a sizeable tax refund each year. Traditionally, that refund gets applied straight to the mortgage on your primary residence, helping you pay it off faster and reduce your overall interest costs. It’s a solid, no-frills move, and makes a lot of sense. But that’s not the only path forward. Depending on your financial priorities, there may be more strategic ways to put that refund to work. Here are three alternative options worth considering. 1. Pay Down Consumer Debt If you’re carrying credit card balances, personal loans, or other high-interest debt, using your refund to eliminate those obligations can offer a stronger short-term return than paying down your mortgage. It also improves your monthly cash flow, giving you more flexibility with your budget or room to invest elsewhere. This move clears the way for you to free up valuable cash flow and tackle your next financial goals. 2. Invest in the Market Once high-interest debt is behind you, your refund can become the fuel for long-term wealth. Rather than leaving that cash idle or reducing low-interest debt, consider reallocating it to market investments that grow over time. Even modest, recurring contributions made consistently each year can meaningfully improve your net worth over a 10 to 20 year horizon. It’s less about making big bets and more about establishing a habit of reinvesting tax savings into productive assets. 3. Fund a Life Insurance Strategy Putting your refund toward a permanent life insurance policy can provide more than just a death benefit. Over time, these policies can accumulate tax-advantaged cash value, which can later be used to supplement retirement income, cover future tax liabilities, or serve as a low-cost borrowing source. It’s a way to convert your annual tax refund into a long-term financial tool that grows quietly in the background, while also protecting your family’s future. The earlier you start, the more efficient and flexible the strategy becomes. Final Thoughts Choosing to redirect your tax refund away from the mortgage isn’t about doing things right or wrong. It’s about making choices that reflect your current financial priorities and long-term goals. At the core of this is the rental cash damming strategy itself. By optimizing your cash flow for maximum tax efficiency, you unlock a source of capital that wouldn’t otherwise exist — a refund that can be used strategically to generate even greater financial gains. Whether it’s paying off debt, investing for the future, or building long-term insurance value, that refund becomes a tool, not just a rebate. There’s no one-size-fits-all answer here. The best approach is the one that aligns with your goals, your cash flow, and the kind of financial life you’re trying to build.