Think putting a down-payment on your dream home is just too far out of your reach? Well, the Canadian 聽government is trying to help you out with through the RRSP Home Buyers 网曝吃瓜 鈥� Plan (HBP). A tax-free way to fund your mortgage down payment, the RRSP Home Buyers 网曝吃瓜 鈥� Plan is an awesome tool to help you get closer to owning your first home (and one that few people actually know about).
In short, the Home Buyers 网曝吃瓜 鈥� Plan allows first time home-buyers to take an tax-free loan from their Registered Retirement Savings Plan (RRSP) for a down payment on a qualifying home. Fun fact: as of March 19, 2019, the Canadian Federal government increased the amount from $25,000.
If you 网曝吃瓜 鈥檙e purchasing with someone who is also a first time home-buyer, you can both withdraw $35,000 from your RRSP for a combined total of $70,000, tax-free.
This all sounds awesome right? Just don 网曝吃瓜 鈥檛 forget the money is considered a loan from your RRSP, so it has to be repaid within 15 years. If you don 网曝吃瓜 鈥檛 refill your RRSP, the amount will be considered a formal withdrawal and added to your taxable income. It 网曝吃瓜 鈥檚 also important to note that when repaying the amount back into your RRSP you do not receive the tax credit that you got the first time around.
To be considered an eligible first-time home buyer and use the RRSP Home Buyers 网曝吃瓜 鈥� Plan you must meet the following criteria (you can see a more detailed list on the ):
Once you 网曝吃瓜 鈥檝e established that you 网曝吃瓜 鈥檙e eligible to make use of the HBP, it 网曝吃瓜 鈥檚 time to fill out some good old forms. The form you 网曝吃瓜 鈥檙e looking for is (AKA the Home Buyers 网曝吃瓜 鈥� Plan Request to Withdraw Funds from an RRSP 网曝吃瓜 鈥�) that 网曝吃瓜 鈥檚 available on the Canada Revenue Agency 网曝吃瓜 鈥檚 Website.
Once you 网曝吃瓜 鈥檝e filled out this form, give it to the institution that holds your RRSP.聽
Don 网曝吃瓜 鈥檛 forget this key rule: the withdrawal must be made within 30 days of taking title on the home. Don 网曝吃瓜 鈥檛 wait and try and withdrawal the money past 30 days of taking the title on your home because you will no longer be eligible for the HBP and you 网曝吃瓜 鈥檒l be taxed on the amount you withdraw (Yikes!).
Okay, here 网曝吃瓜 鈥檚 where things get relatively less fun. Since the Home Buyers 网曝吃瓜 鈥� Plan is technically considered a loan (interest free, though – yay!), the Canadian Revenue Agency gives you 15 years to repay the amount you took out for your home. The first payment (1/15 of the initial withdrawal total) is due back to your RRSP two years after your withdrawal.
Forget what you owe? Don 网曝吃瓜 鈥檛 fret, the CRA will indicate the balance you have to repay, the amount you have already repaid, and the amount of your next payment on your Notice of Assessment, as well as on a HBP account statement you 网曝吃瓜 鈥檒l receive.
If you have questions about your HBP balance you can login to your CRA MyAccount or give them the CRA a call at 1-800-959-8281. To get started with repaying, you have to make a contribution to your RRSP in the year the repayment is due or within the first 60 days of the following year.
Of course, you 网曝吃瓜 鈥檙e welcome to make more than your minimum payments to reduce it quicker. Either way, however, you need to be making the minimum or else you 网曝吃瓜 鈥檒l default on your HBP, leading to you being taxed on the amount you withdrew from your RRSP.
Another key thing to note is that you have to report these contributions as HBP loan repayments on your T-1 General Income Tax Return. These payments are not contributions, they 网曝吃瓜 鈥檙e repayments and you won 网曝吃瓜 鈥檛 get RRSP tax credits for repayments. This is another reason why some Canadians may default on their HBP.
Well, there you have it: almost everything you need to know about the RRSP Home Buyers 网曝吃瓜 鈥� Plan. As always, if you have any questions about if you qualify or if this is something that makes sense for your financial plan or if you can book a call.
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Track every category. Review every receipt. Color-code your life. Become the kind of person who enjoys looking at bank statements on a Sunday. For most people, that version does not stick. Not because they are bad with money. Because the setup is too fussy, too time-consuming, or too annoying to survive real life. A beginner budget does not need to be perfect. It needs to be usable.
Track every category. Review every receipt. Color-code your life. Become the kind of person who enjoys looking at bank statements on a Sunday. For most people, that version does not stick. Not because they are bad with money. Because the setup is too fussy, too time-consuming, or too annoying to survive real life. A beginner budget does not need to be perfect. It needs to be usable.
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