How to use your RRSPs when buying your first home

Written by: May Sulit

Buying your first home is exciting, but it can feel overwhelming at times. Here are some details on the RRSP Home Buyers’ withdrawal Plan and how you can access your RRSP savings to purchase your new home.
 

Home Buyers’ Plan (HBP)
A Federal government program that allows you to borrow up to $25,000 from your RRSP tax free to fund your first home purchase. If both you and your spouse qualify, you can each borrow up to $25,000 from your RRSPs, for a total of $50,000. The money must have been in your RRSP for at least 90 days.

Here’s how it works:

  • Qualifying for the HBP – You must not have lived in a home owned by you or your spouse in the last
    5 years. You must have entered into a written agreement to buy or build a home that you intend to
    occupy as your principal residence.
     
  • Repaying your RRSP – You have up to 15 years to repay the amount you borrowed from your
    RRSP. You must start to make repayments in the second year after the year in which you made your
    withdrawal(s). In general, you have to repay 1/15 of the total amount you withdrew each year. If
    you don’t repay the portion due in a given year, that amount is added to your taxable income.

Don’t forget, there are 3 main programs to help out first-time home buyers

  • Home Buyers’ Plan
  • Land Transfer Tax Rebate
  • First-time Homebuyers’ Tax Refund

With the help of your real estate lawyer, we can go through all of these incentives when purchasing your
first home. Contact us today!

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