THE HOME BUYER'S PLAN - RRSP

Buyer can withdraw up to $20,000 from RRSPs to buy a home. RRSP issuer will not withhold tax on these amounts and withdrawals that meet all applicable Home Buyer Plans conditions do not have to be included in your income. Before you can withdraw funds you must have entered into a written agreement to buy a home which you must occupy no later than one year after buying the home.

Details:

Up to $20,000 can be withdrawn tax-free from RRSPs to buy a principal residence. Couples, including common-law, will be able to withdraw up to $40,000. You are not considered a first-time home buyer if you or your spouse owned a home that you occupied as your principal place of residence in the past 5 years. The 15-year repayment period will begin in the second calendar year following the calendar year in which the withdrawal is made. A qualifying home must be acquired before October 1 of the calendar year following the year of withdrawal.

Home buyers withdrawing funds from RRSP’s do not have to pay income tax on the amount withdrawn, as long as the funds are repaid into an RRSP in the future. To get the tax break for a contribution and to use those funds under the plan, the money must be in your RRSP for at least 90 days before a withdrawal is made. Make sure that all documentation clearly reflects your understanding and conditions of the transaction. Has anything been forgotten? Don’t rush. You could lose money, financing or even the sale.

Note: Please check with the Goverment of Canada for the latest plan and update.

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