q1 2009 exam morning

when wothdraing the 100,000 from the portfolio to pay off the mortgage, why was that not taxed.

I asked the same question a few hours ago in the Return Objective Confusion thread. Can anyone shed some light on this?

Here’s what I posted in the other thread. Any help is appreciated. I’ve been getting confused with TDA withdrawals for housing expenses. In my experience, these types of withdrawals are never taxed, regardless if the question explicitly states their non-taxable nature or not. For one of the morning sessions, it was stated that withdrawals for housing and education are NOT PENALIZED. I still took the tax off because I didn’t equate tax with a “penalty.” In the morning session of the 2009 exam, a married couple withdrew 100,000 from a TDA for housing expenses and it was not taxed. Then they withdrew 200,000 for college expenses and it WAS taxed. Am I missing something here? I hate to lose points on something so stupid but they really seem to be inconsistent here. I almost hesitate to apply the tax rules to the letter of the law with these things due to this.

they plan to pay off their mortgage and associated taxes by withdrawing CAD 100,000 from their portfolio upon retiremetax payment tax already included in it

Yeah. Question 1 is a lesson in reading not a lesson in Finance.

For the same question, how come we don’t need to include the expected annual after-tax portfolio return of 4% as my inflow? (because that’s the portfolio where I’m trying to generate the required return from?) If I have other assets that also formed my investable assets, then I should include their income as my inflow? Thanks.