Blog: March 2013

Home Buyers Tip: You can use your RRSP to buy your first house

Source: FCAC

Did you know that if you live in Canada, you can use your RRSP to buy a house? Hmmmn! You may have this idea before, but this little information will reinforce your knowledge. As a first-time home buyer, you can use your RRSP to buy your first house under the Home Buyers' Plan (HBP). This allows you to use the money from your RRSP as your down payment towards the purchase. The HBP is administered by the Canada Revenue Agency (CRA) and is tax-free. Under the homebuyers’ plan you are allowed to withdraw up to $25,000 from your RRSP. With your spouse, partner, or someone else, each of you can withdraw up to $25,000, for a total of up to $50,000.The great news is that the RRSP withdrawn does not need to be taxed and included in your income on your annual income tax return. You don't have to start paying back the money to your RRSP until two years after the purchase of the home. The RRSP used towards the house purchase should be paid within 15 years by making RRSP deposits each year, starting the second year following your withdrawal. You will be notified by the CRA you once you need to start repaying the amount. Let’s say, if you do not repay the amount due in a given year, it will be included in your taxable income for that year and you'll pay income tax on this amount. Does this extra knowledge help you? If yes, see how we can help more to find your new home. It is a life-long dream you could imagine. For additional information, please do not hesitate to contact us or visit our website Thanks for reading. The Team Cortez