Deductible Interest Tracker

Investment Sale

Use this event when you sell stocks or ETFs from your brokerage holdings.

When to Use

Record this event whenever you sell shares of a security you hold. The app calculates how to split the proceeds between borrowed and personal portions based on how the position was originally funded.

What You Enter

Date — The settlement date of the trade, when proceeds are deposited to your account.

Symbol — The ticker symbol of the security you're selling.

Units — The number of shares you're selling. This can be all or part of your position.

Price per unit or Total amount — Either the sale price per share or the total proceeds. The total should be net of any trading fees.

Fee (optional) — Trading commission, if any. If your total amount is already net of fees, leave this blank.

What Happens

When you sell securities, the app reverses the investment process—borrowed funds that were "invested" return as "uninvested" borrowed cash.

Credit Account

The borrowed portion of the sold shares returns to uninvested status:

  • Invested Principal decreases by the borrowed cost of shares sold
  • Uninvested Principal increases by the borrowed portion of proceeds

If you sell at a loss, the decrease in invested principal may exceed the increase in uninvested principal. The "lost" borrowed capital doesn't disappear from your debt—you still owe it—but the portion that can be traced to investments is reduced.

Brokerage Account

Your cash increases by the sale proceeds:

  • Borrowed Cash increases by the borrowed portion of proceeds
  • Personal Cash increases by any gain plus the personal portion of proceeds
  • Total Brokerage Cash increases by the total proceeds

Holdings

Your position is reduced or eliminated:

  • Units Held decreases by the number sold
  • Total Cost Base decreases proportionally
  • Borrowed Cost Base decreases proportionally
  • Personal Cost Base decreases proportionally

When you sell part of a position, the app removes a proportional slice of your cost base and its borrowed/personal split.

How Proceeds Are Split

The app splits sale proceeds based on the original funding of the shares sold, with adjustments for gains or losses.

At cost (no gain or loss): If you sell for exactly what you paid, the proceeds split matches the original funding split. If the position was 70% borrowed, 70% of proceeds go to borrowed cash.

At a gain: The cost recovery portion follows the original split. The gain portion goes entirely to personal cash—gains are income, not return of borrowed capital.

At a loss: Here's where it gets nuanced. The loss reduces both the borrowed and personal recovery proportionally. Your debt doesn't decrease just because your investment lost value, but the amount that can be traced to "invested" principal does decrease.

Example: Selling at a Gain

You hold 100 shares of VFV with a $2,500 cost base: $2,000 borrowed (80%), $500 personal (20%). You sell all 100 shares for $3,000.

Event: Investment Sale

  • Symbol: VFV
  • Units: 100
  • Total: $3,000 (net of fees)

Calculation:

  • Cost base removed: $2,500
  • Borrowed cost base removed: $2,000
  • Gain: $500 ($3,000 - $2,500)

Proceeds split:

  • Borrowed cash receives: $2,000 (the borrowed cost returned)
  • Personal cash receives: $1,000 ($500 personal cost + $500 gain)

After:

  • Invested Principal decreases by $2,000
  • Uninvested Principal increases by $2,000
  • Borrowed Cash increases by $2,000
  • Personal Cash increases by $1,000
  • VFV holding: eliminated

The $500 gain is yours—it goes to personal cash and doesn't affect the borrowed/invested tracking.

Example: Selling at a Loss

Same position: 100 shares of VFV, $2,500 cost base ($2,000 borrowed, $500 personal). But the market dropped, and you sell for $2,000.

Event: Investment Sale

  • Symbol: VFV
  • Units: 100
  • Total: $2,000

Calculation:

  • Cost base removed: $2,500
  • Loss: $500 ($2,000 - $2,500)
  • Proceeds are less than cost, so we allocate based on original proportions

Proceeds split:

  • Borrowed cash receives: $1,600 (80% of $2,000)
  • Personal cash receives: $400 (20% of $2,000)

After:

  • Invested Principal decreases by $2,000 (the full borrowed cost)
  • Uninvested Principal increases by $1,600 (what actually returned)
  • Borrowed Cash increases by $1,600
  • Personal Cash increases by $400
  • VFV holding: eliminated

You lost $500, which reduced both your borrowed and personal recovery proportionally. But critically, the $400 of "lost" borrowed capital ($2,000 - $1,600) doesn't vanish from your debt. You still owe the full credit balance—it's just that $400 less can be traced to investments.

This distinction matters: the $400 that was borrowed, invested, and lost is still deductible debt. The loan doesn't disappear because the investment performed poorly.

Partial Sales

When you sell part of a position, the app removes a proportional slice of your cost base.

If you hold 200 shares with a $5,000 cost base ($4,000 borrowed, $1,000 personal) and sell 50 shares (25%), you remove:

  • $1,250 of total cost base
  • $1,000 of borrowed cost base
  • $250 of personal cost base

Your remaining 150 shares have a $3,750 cost base ($3,000 borrowed, $750 personal)—same 80/20 split.

Common Questions

What if I sell shares I bought at different times? The app treats each security as a single pooled position. When you sell, you're selling from the combined pool with its blended cost base and borrowed/personal ratio. This aligns with Canada's adjusted cost base (ACB) rules.

Do I need to record capital gains separately? No. The app calculates the gain or loss automatically from your proceeds versus cost base. For your actual tax return, you'll report capital gains on Schedule 3, but for interest deductibility tracking, the app handles everything.

What happens to the borrowed portion if the company goes bankrupt? If a security becomes worthless, you'd record a sale at zero proceeds. The entire cost base is a loss. The borrowed portion that was invested no longer traces to any investment, but the debt remains. This is why you still owe your HELOC even if your investments fail.

CRA Basis

The allocation of sale proceeds follows from the tracing rules in Income Tax Folio S3-F6-C1. When borrowed money is invested and later returned through a sale, the return of capital follows the same tracing as the original investment.

Gains are not considered return of borrowed capital—they're income. Losses reduce the amount that can be traced to investments, but the underlying debt remains.

Related Events

Investment Purchase — How the position was originally established.

Investment Distribution — Return of capital in distributions works similarly to sales.

Borrowing To Invest — If you want to reinvest the returned borrowed cash.