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9 Things you Need to Know About the "1st Time RRSP Home Buyers Withdraw" for Down Payment

I'm sure most people know that there is a government program that allows you to take money from your RRSP without tax implications in order to use it as a down payment on a property but did you know the following:

 

1. The money must be there for at least 90 days in order to qualify for taking out.

2. The allowable withdrawal has been increased in the past few years from $20,000. to $25,000.00

3. If you have a spouse you can both take $25,000.00 out

4. You have the year you took the money out plus 2 additional years, as a grace period, before you have to start paying it back into your RRSP.

 

5. You have 15 years to pay it back into your RRSP. So 1/15th of the money withdrawn each year.

6. I would advise transferring the balance into something that does not fluctuate as you move closer to the possibility of using it.

 

7. It can take anywhere from 2 days to over a week to get the money out. Very important to know as you may need the money even sooner than this if you have to put a deposit on a property in order to purchase it.

 

8. The easiest way to get it back into your RRSP is through an automatic savings plan. Keep this going or restart it as quickly as you can after the purchase of your new home.

 

9. The property must be your principal residence.

 

 

The Homebuyer's withdrawal plan is a government program so please check out their website for the latest on the details as well as other qualifications in order to take advantage of it if it makes sense for you.

 

 

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html

Tony Marchigiano | Mortgage Specialist - Mortgage Sales BC Region, RBC Royal Bank | Royal Bank of Canada | T. 604-505-7109 | F. 778-737-0054

 

Follow me on Twitter: http://twitter.com/RBCTMarchigiano

Website: http://mortgage.rbc.com/tony.marchigiano

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