Using Your RRSP to Buy or Build a Home in Canada
Through Canada's Economic Action Plan, the federal government is providing first-time homebuyers with additional access to their registered retirement savings plans (RRSPs) for home purchases, by increasing the Home Buyers' Plan (HBP) withdrawal limit.
About the Initiative
The HBP allows first-time homebuyers to withdraw amounts from an RRSP to purchase or build a home without having to pay tax on the withdrawal. The $5,000 increase in the HBP withdrawal limit -- to $25,000 from $20,000 -- applies to withdrawals made after January 27, 2009. This is the first increase in the withdrawal limit since the HBP was introduced in 1992. It allows a couple to withdraw up to $50,000 from their RRSP funds toward the purchase of their first home.
Amounts withdrawn are repayable in installments over a period not exceeding 15 years, starting the second year following the year the withdrawal was made.
How It Works
First-time homebuyers can visit their financial institution to withdraw RRSP funds under the HBP.
Who Is Eligible
First-time homebuyers are eligible. An individual is generally considered a first-time homebuyer if neither the individual nor the individual's spouse or common-law partner owned and lived in another home in the year the HBP withdrawal is made, or in any of the four preceding calendar years.
Special rules apply for the purchase of homes that are more accessible or better suited to the personal needs and care of an individual who is eligible for the Disability Tax Credit. In these situations, withdrawals may be made under the HBP, even if the first-time homebuyer requirement is not met.
How to Find Out More
For more information, please visit the Department of Finance Canada website or the Canada Revenue Agency website.
Of course, the easiest and less stressful way to find out more is to give me a call at 519-435-1600 if you are thinking of buying a home or condo in London Ontario
More Info:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html