How to generate 3% monthly cash flow in your TFSA selling covered Calls

[@ptahX]

I just found your channel, I have been trying to find something like this for a very long time. I am still going back through your videos. Could you possibly go over taxation as a proprietorship selling Puts, Calls and diagonals outside of a registered accounts. Thank you so much for your time, very much appreciated!

[@RealEstateTaxTips]

Glad you found our channel useful. Will keep that in mind for future video production.

[@ZYTalkshow]

Very helpful, Thanks for being so dedicated and hard-working!

[@RealEstateTaxTips]

Thank you for watching! Love your content too!

[@tonny9168]

Thank you for this amazing info. Will your TFSA be subjected to taxes if you frequently sell covered calls on your stock? I know if you frequently trade stock you will be subjected to taxes. Thank you

[@mrathos]

Great videos. Thank you ! I think if we sell weekly covered calls, it may be considered as speculative and not as investments and the TFSA account may be tagged as non registered account and will be subject to taxes like a non-registered account. I'm not sure what is the trigger, meaning what is the minimum days you must keep an asset (Stock or options) to sell it without consequences on taxes. For monthly covered calls it should be safe, but dailies or weeklies we need to know what is the ARC law.

[@mzc.d.4039]

Thank God I found you! Would it be wise to take out a line of credit from refinancing my mortgage and put it in a TFSA, which I have 60k of room so I can do this cover call idea? I haven't looked at the five step process for deducting mortgage interest but I like this one better as I want to start playing in the stock market.

[@RealEstateTaxTips]

Interest is not deductible if you borrow money to invest in your TFSA

[@fi_high]

Great timing for this video, thank you 😊

[@RealEstateTaxTips]

Glad it was helpful!

[@mlewis6167]

Great video. What happens if the stock you are writing the covered call on has a dividend payment due? Who gets the dividend payment? Ty

[@RealEstateTaxTips]

If you own the stock, and your stock has not been called away, then you will still get the dividend

[@QuanWei_]

Can you sell covered called for dividend paying stocks?

[@sukanya87]

Which broker do you use which allows for covered calls in TFSA?

[@RealEstateTaxTips]

IBKR

[@petervigna3579]

Can you do spxs and spxl 100 shates each and just let them get called all yhe time for the best premium

[@RealEstateTaxTips]

You can...but then again...you're investing. Need to consider your risk.

[@SUITESFORRENT]

Hi would routinely selling covered calls in your TFSA cause problems with the CRA because you are treating the TFSA like a form of business income generation or would it be considered active trading?

[@RealEstateTaxTips]

Whether or not the income generated in your TFSA from selling covered calls is considered day trading activities really goes back to many different criteria. If you have not already, I encourage you to subscribe to our KZbin channel. In the next couple of weeks, we will release a video discussing the criteria that CRA uses to determine whether your trading activities are considered day trading or not. Stay tuned.

[@citizenm9590]

@@RealEstateTaxTips i had same question about CRA flagging this as active trading, can you share the video about the CRA?

[@adamo1827]

Great video. I plan on selling covered calls in my TFSA using XIU etf which is the most liquid ETF in Canada. If my covered calls get exercised and my shares get assigned and called away, does this impact my TFSA contribution room? I would assume no because my shares get liquidated for cash.

[@RealEstateTaxTips]

Can't see that it is affecting your TFSA room at all. It would only affect your TFSA if you withdraw the profit out immediately.

[@adamo1827]

@@RealEstateTaxTips Awesome. Agreed. I did research and watched countless videos and this concern was never raised. So it’s safe to conclude that having your shares called away inside a TFSA doesn’t affect contribution room.

[@RealEstateTaxTips]

@@adamo1827 Yep...not until you withdraw money

[@Chap17]

Thank you

[@RealEstateTaxTips]

You're welcome

[@GamePlay-wn2yj]

Hi Cherry, if I take a Heloc and use the funds to invest in stocks, can I claim the interest rate on the heloc? Thanks.

[@RealEstateTaxTips]

Technically speaking, you can only deduct the interest expense incurred for the purpose of earning income (100% taxable), not capital gain. If you are investing in stock that only earns you capital gain, you might get challenged by CRA for deducting interest expense. If you are borrowing to invest in stock that provides you dividend income, then the interest expense is tax deductible.

[@neriogonzalez3830]

@@RealEstateTaxTips So If I buy stocks/ETF that pays dividends, it count as income and it can be deductible?

[@RealEstateTaxTips]

@@neriogonzalez3830 as long as the investment is NOT in a registered plan. As long as the dividends are taxable - you add it to your income return.

[@PrincipleToRichLife]

Hi cheery if I sell cover call on my TFSA acc once a month to genarate cash flow. Does that consider as day dreading? And do I have to report my gain to CRA. Appreciate what you are doing.

[@RealEstateTaxTips]

Hi JP, if that's all your do... and there's nothing else in your TFSA account, I would not think that would be considered day trading. Again consult with someone who knows all your investment portfolio and what you do to get proper tax advice.

[@PrincipleToRichLife]

@@RealEstateTaxTips Thanks. Appreciate your reply. I'm curious do you assist individuals on the crypto tax and or income tax as well. If so how do you charge?

[@neriogonzalez3830]

@@RealEstateTaxTips Hi, what about selling th call contract each week? or If I let the contract to be exercise because the contract got in the money? I really would appreciate your answer

[@jefflabalestra1571]

How do you avoid the impact of the options commissions/fees reducing your profits. For example, my bank charges me $10 + $1.25 per contract on the buy and then again on the sell. This can highly reduce the monthly returns of the covered call premiums each month. I wanted to get your thoughts/recommendations.

[@RealEstateTaxTips]

Many of my clients use IBKR. By no means I am endorsing their platform but, the commission is like $1 to $2 per contract, depending on volume of in the market.

[@jefflabalestra1571]

@@RealEstateTaxTips Thank you!!

[@MaitraRoy]

only IBKR for this. Otherwise not worth it.

[@oakejs]

If you are selling 5-10 covered calls each week would the CRA consider it active trading?

[@RealEstateTaxTips]

We are releasing a videos on the 6 mistakes you should avoid when investing through your TFSA and that has some of the information you're looking for. We are planning a very detailed video on day trading activities as well. Make sure you subscribe so you get that latest information.

[@anandlobo1685]

If the stock price falls won’t it be better to let the option we sold expire worthless?? Instead of buying the call we sold back & only get $0.50

[@RealEstateTaxTips]

You can, but if you talk to many experienced investors, they prefer to close the call at very nominal cost to have the peace of mind that nothing would happen after the market close.

[@anandlobo1685]

@@RealEstateTaxTips that’s a good reason., thank you ....enjoy your videos...very informative & lots of content.

[@watsss]

Is selling covered calls the only options strategy you can use inside a TFSA? Can you do puts inside a TFSA?

[@RealEstateTaxTips]

I have never personally tried, but you should be able to purchase puts inside your TFSA account as well. Unfortunately shorting a position is generally not allowed in TFSA

[@Chap17]

What if the price went below $5.15

[@RealEstateTaxTips]

If the price goes below $5.15, you pocket the entire amount of premium of the call that you sold. Premium you collected can be used to reduce your purchase cost. You can continue to sell covered call at the price that's above your new reduced purchase cost to continue recoup your losses. You can also sell the stock if you want to cut your loss. Stock investments is not a guaranteed investment. In fact, no investments are guaranteed investments to begin with. There is always a risk component. Be sure to understand the risks of losing money by investing in stock before you commit to purchase a particular stock. Good luck!

[@petervigna3579]

You cant have fomo for this to work

[@RealEstateTaxTips]

Agree 100%

[@Joshuasham]

Please redo this video but without using a crypto stock as the example. You lose all credibility the moment that to mention a crypto mining stock.

[@RealEstateTaxTips]

Hi Joshua, appreciate your feedback. Thank goodness I ain't teaching people how to trade and I'm simply sharing this Wheel Strategy that you can apply to any stocks in the future. The reality is that one trading strategy isn't a fit for every single market. Hopefully you didn't get burn in this stock market. All the best to you.