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RRSP HOME BUYER PLAN

DID YOU KNOW? Qualified buyers may borrow INTEREST FREE for 15 years from your RRSP savings.  You are allowed to borrow up to $25,000 per buyer ($50,000 per couple) towards the cash down payment on the purchase of a residence.

Banks often discourage clients from going this route when purchasing a residence, because banks want buyers to borrow and pay INTEREST, rather than borrowing interest- free against their RRSP, which does not benefit the bank in any way.

The VERY best investment for one’s RRSP is the purchase of a principal residence which, in time, will generate a TAX FREE capital gain!

TO QUALIFY FOR THE RRSP HOME BUYER PLAN:

1. FIRST TIME HOME BUYER

  • You must be a First Time Home Buyer OR you (or your spouse) must not have owned a home that you occupied in the last five (5) years.
  • If you qualify you may re-activate the First Time Home Buyer’s program
  • You must have a written agreement to purchase a home before withdrawing RRSP funds.

2. PRINCIPAL RESIDENCE

  • You must use the property as your principal residence within ONE year of completing the purchase to be able to withdraw from your RRSP.

3. RESIDENT OF CANADA

  • You must be a resident of Canada for the period between the date of withdrawal from your RRSP and the closing date of the home purchase.

4. ANY HOME (RESALE OR NEW)

  • The home can be new from the builder or resale to be eligible for the RRSP Home Buyer Plan

5. NO MONEY OWED ON PRIOR RRSP BORROWINGS

  • At the time of withdrawal from your RRSP, you must NOT owe any money to your RRSP for a prior borrowing to buy a home.

6. 90 DAY DEPOSIT

  • RRSP funds must have been on deposit for at least 90 days before they can be used under the program.

7. WITHDRAW RRSP WITHIN 30 DAYS OF COMPLETING HOME PURCHASE

  • RRSP funds cannot be withdrawn later than 30 days after the house purchase is completed and if multiple withdrawals, they must be made in the same calendar year or in January of the next year.

8. FUNDS FOR ANY USE

  • The funds can be applied to the down payment, land transfer tax, legal fees and disbursements, improvements to the home, even furniture and appliances.

9. MAXIMUM $25,000.00 PER BUYER

  • You can borrow up to a maximum of $25,000.00 from your R.R.S.P. tax free. Maximum for two spouses (or any 2 buyers) is $50,000.00. Any such qualified withdrawal from RRSP is not subject to tax at time of withdrawal.

10. PAY BACK

  • You are required to pay back the funds borrowed (beginning in the second year following the year of withdrawal) over a period of 15 years by depositing 1/15th of the amount withdrawn, annually to your R.R.S.P.
  • Prepayments are allowed at any time without penalty. However, if you miss a payment for any given year, you will not be allowed to pay it back and it will be included in your taxable income for that year.
  • If a person paying back dies or becomes a non-resident or becomes 70 years of age, additional repayment rules apply.
  • For more information please contact your bank or the Revenue Canada at 1-800-959-8281.
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John Siarkas

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