Using Your RRSPs To Buy Your First Home
You might or might not know that you can use your RRSP savings to buy your first home in Calgary or anywhere else in Canada.
We start buying RRSPs to save on taxes and to save for our retirement. But most of us don’t think of using RRSPs as a down-payment for a home or at least most of us don’t know we are able to do that.
When buying a house coming up with the required down-payment is a struggle most of the time. Knowing all our options ahead of time helps a lot. You can strategically plan ahead and save a lot of money in taxes and stress when buying a house
How does First Time Home Buyer’s Plan work?
The Federal Government has created a program where first time home-buyers are able to use their RRSPs savings for the purchase of their first home.
The program allows each participant to withdraw up to $25,000 in RRSPs to finance the purchase under the First Time Home-buyers’ Program ($50,000 per couple).
What makes this program really easy and user friendly is that you have 15 years to pay back the RRSPs so it is a long term loan to yourself really.
Should you use RRSPs if you already have a down payment saved for the purchase of your home?
If you already have the down payment saved buying an RRSP with that saving may be beneficial, the smart thing to do because it would get you a tax deduction for that year.
On top of that you might even be eligible for a tax refund due to a larger RRSP contribution that year. You would be able to further invest your tax return or simply take a well deserved vacation.
Important fact to remember: When using your RRSP for down payment to buy your first home the RRSP funds must be in the bank, on deposit for 90 days prior to purchase.
The government makes it easy to repay the money into your RRSP. They will monitor it for you and remind you of the payments.You will be reminded annually about the amount that is required to be deposited in to your RRSP and you have 15 years to repay with no penalty.
Ask me about other ideas to make your purchase a little easier
and financially more feasible.
Click on the link for more information on using your RRSPs to buy your first home.
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