Using your RRSP for your Down Payment

The Federal Governments Home Buyers Plan allows First Time Home Buyers to borrow up to $35,000 of their RRSP savings to help finance their downpayment on a home. This amount doubles to $70,000 if you’re buying with your partner or spouse as long as they also qualify as a first time home buyer.   Who is Eligible? To take advantage of the Home Buyers’ Plan you have to be a first time home buyer. To qualify as such, you need to be a Canadian citizen and you must not have owned any property within four calendar years of the purchase (this means you haven’t lived in a home owned by you or your spouse within the previous four years). There may also be other conditions you qualify as a first time home buyer. Contact me to discuss your individual situation further. Also to be eligible, you must have a written agreement to buy or build a qualifying home and you must plan to live in the home for a minimum of one year. The Home Buyers’ Plan is not available for the purchase of  an investment (rental) property.  The funds must also be in the RRSP for at least 90 days prior to the withdrawal.  Repayment Rules Repayment of the funds you withdraw from your RRSP under the Home Buyers Plan must be completed within 15 years of withdrawal. Those taking advantage of the Home Buyers Plan will receive a statement from the government which outlines the repayment requirements.  Another benefit of the Plan is that it allows you 1 year to adjust to the expenses of becoming a homeowner and to prepare for when repayments begin. You will then be required to repay a minimum of the total amount you borrowed divided in equal instalments over 15 years. Repayments are made by simply contributing funds back into your RRSP. Then when you complete your tax return at the end of the year you will declare funds as repayment as opposed to a new contribution. If you do not repay the minimum amount each year you will be required to declare it as taxable income. Taking advantage of the Home Buyers’ Plan is a great option as you are drawing from your existing resources to create your downpayment. If you are looking to buy your first home contact me to discuss if using your RRSP’s is a suitable option for your individual situation.