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  • Writer's pictureMike Hidlebaugh

Using RRSP’s for Down Payment on a Home!

Updated: May 12, 2021

It can be difficult to come up with a down payment for a home. One way the federal government has made it a little easier for first time home buyers is by allowing them to access their RRSP’s, tax free. This program is called the RRSP Home Buyer’s Plan. The maximum withdrawal amount was increased to $35,000 in 2019. If you are purchasing

the home with someone else who qualifies as first-time home buyer, they could also access up to $35,000 from RRSP’s for a total of $70,000. If only one of you qualifies as a first-time home buyer and that person has not resided in the house owned by the other partner, you are still able to access your RRSP’s. In order to access your RRSP’s, they must have been in your account for a minimum of 90 days. It is important to note that you are essentially borrowing from your RRSP’s so the amount used will have to be paid off over a 15-year period. For example, if you accessed the full $35,000, you would have to pay back $2,333 yearly for the next 15 years.

How to Participate in the First Time Home Buyers’ Plan

you must be considered a first-time home buyer (have not resided in a home that you or your spouse have owned for the past 4 years.

· you must have a written agreement to buy or build a qualifying home, either

for yourself or for a related person with a disability

· you must be a resident of Canada when you withdraw funds from your RRSPs under the HBP and up to the time a qualifying home is bought or built

· You must intend to occupy the qualifying home as your principal place of residence within one year after buying or building it. If you buy or build a qualifying home for a related person with a disability, or help a related person with a disability to buy or build a qualifying home, you must intend that that person occupies the qualifying home as his or her principal place of residence

· In all cases, if you have previously participated in the HBP, you may be able to do so again if your repayable HBP balance on January 1st of the year of the withdrawal is zero and you meet all the other HBP eligibility conditions.

If you are considering using RRSP’s for down payment on a home, start the conversation with your Financial Advisor and Mortgage Associate or Broker!

Source: Government of Canada - Canada Revenue Agency

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