Turn a TFSA Into $300 in Monthly Tax-Free Income

The Tax-Free Savings Account (TFSA) can work wonders if you treat it as an income-generating vehicle rather than a regular savings account. Diligent, regular, and sustained contributions — even aiming for the maximum yearly limit, if possible — can produce your desired tax-free income stream. 

For example, withdrawing an extra $300 tax-free every month from a TFSA can supplement your regular income. The buildup can begin with a dominant institutional landlord or a real estate investment trust (REIT). REITs trade like stocks and are eligible investments in a TFSA. Moreover, the monthly payouts can easily be incorporated into your household budget.

How to fund the build

If you take the path of maximum annual contributions with SmartCentres (TSX:SRU.UN) as the anchor stock, you would need a total capital of approximately $58,540. Assuming the TFSA yearly limit is pegged at $7,000, you’d hit the $300 per month target ($3,600 per year) in 8.4 years.  

SRU.UN currently trades at $30.10 per unit and pays a lucrative 6.15% dividend yield. However, by maxing out the annual TFSA limit and reinvesting the monthly distributions, the period actually shortens to nearly seven years. Your total cash outlay comes out to around $47,250, while the REIT funds the remaining $11,290 through its own distributions. You’d have an extra $300 monthly paycheck thereafter.

Necessity-based retail moat

SmartCentres is a $5 billion fully integrated REIT and one of the largest real estate entities in Canada. The assets, valued at over $12.3 billion, consist of retail shopping centres, mixed-use properties, and development lands. However, it has built the business model around Walmart. The retail giant provides the foundational strength.

The solid partnership with Walmart, formed via a joint venture, dates back to 1999. Today, SmartCentres boasts a necessity-based retail moat, as 95% of tenants are national or regional. Furthermore, more than 80% provide essential services, ensuring stable rent collections even during economic downturns.

According to SmartCentres, major retailers continue to accelerate sustainable growth. The expansion plans in Canada by other anchor tenants such as Loblaw, Costco, and Dollarama are tailwinds for the rental business. Meanwhile, expect the development pipeline, including multi-residential, self-storage, office, and industrial properties, to generate additional recurring income soon.

Solid start in 2026

SmartCentres notes the favourable start this year, characterized by the strong tenant base and resilient leasing momentum in the first quarter. In the three months ending March 31, 2026, same-property net operating income increased 1% to $144.9 million versus the first quarter (Q1) of 2025. The in-place and committed occupancy rate at the quarter’s end was 97.6%, while the average lease term to maturity is 4.3 years.

Rent growth during the quarter was 5.8%, following the extension of approximately 80% of leases maturing in 2026. The financial and operational results in Q1 2026 are reflected in the stock’s performance. As of this writing, SRU.UN outpaces the broader market, up 28.5% versus +11.33% year to date. The REIT has never missed a monthly payout since November 2002.

No huge capital requirement

Canadians with TFSAs don’t need a million dollars to methodically build a tax-free monthly paycheque that lasts for decades. It only requires a few thousand, broken into annual contributions, and invested in a REIT with a defensive foundation like SmartCentres. The timeline is shorter if you allow the monthly distributions to compound.

The post Turn a TFSA Into $300 in Monthly Tax-Free Income appeared first on The Motley Fool Canada.

Should you invest $1,000 in SmartCentres Real Estate Investment Trust right now?

When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 10 percentage points.*

They revealed what they believe are 10 TSX Stocks for 2026… and SmartCentres Real Estate Investment Trust made the list – but there are 9 other stocks you may be overlooking.

Don’t miss out on our Top 10 TSX Stocks for 2026, available when you join our mailing list!

Get the 10 stocks instantly #start_btn5 { background: #0e6d04 none repeat scroll 0 0; color: #fff; font-size: 1.2em; font-family: 'Montserrat', sans-serif; font-weight: 600; height: auto; line-height: 1.2em; margin: 30px 0; max-width: 350px; text-align: center; width: auto; box-shadow: 0 1px 0 rgba(0, 0, 0, 0.5), 0 1px 0 #fff inset, 0 0 2px rgba(0, 0, 0, 0.2); border-radius: 5px; } #start_btn5 a { color: #fff; display: block; padding: 20px; padding-right:1em; padding-left:1em; } #start_btn5 a:hover { background: #FFE300 none repeat scroll 0 0; color: #000; } @media (max-width: 480px) { div#start_btn5 { font-size:1.1em; max-width: 320px;} } margin_bottom_5 { margin-bottom:5px; } margin_top_10 { margin-top:10px; }

* Returns as of July 6th, 2026

More reading

• 2 Dividend Stocks That Look Built for the Rate Pause
• How $20,000 Across 4 TSX Stocks Can Deliver $1,000 in Passive Income
• The Ideal TFSA Stock Paying a 6% Yield Every Month
• 2 High-Yield Dividend Stocks That Could Be a Safer Pick for Canadian Retirees
• How to Build a Paycheque Portfolio With 2 Stocks That Pay Monthly

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Costco Wholesale, Dollarama, SmartCentres Real Estate Investment Trust, and Walmart. The Motley Fool has a disclosure policy.