Using the Home Buyer Plan (HBP) from an RRSP for the down payment to purchase a house.
February is the month to decide if you should be putting money into your Registered Retirement Savings Plan (RRSP) for the purchase of your first house!
The complete rules for investing and withdrawing funds from an RRSP can be found at the government of Canada’s site:
Here are some specific things that you can do to help purchase a house more quickly:
- Consider using a Spousal RRSP. If one partner is earning the bulk of the wages, that person can contribute to their spouse’s RRSP. This will allow up to $50,000 from RRSP’s to be used in the down payment of a property through the HBP.
- The requirement for these funds is that they are for the “first time” purchase of a property. This means that you have not owned a residential property in Canada in the last five years.
- Funds that will be used for the purchase of a property from an RRSP must be held in that RRSP for a minimum of 90 days.
- You must repay to your RRSP over the next 15 years otherwise the amount that needs to be repaid each year is taxable for that year.
- Funds placed into an RRSP up to March 1, 2017 (don’t wait to the last day!) can be claimed as a deduction on your 2016 income tax return.
Each individual will have unique circumstances, so you should consult a Financial Planner to determine if these options are appropriate for you.