If you’re a first-time homebuyer, with the federal Home Buyer’s Plan you may be eligible to withdraw up to $25,000 from your registered retirement savings plan (RRSP) for a down payment when buying or building a qualifying home.
The HBP gives first-time homebuyers access to their RRSP holdings with no tax consequences provided they pay them back within 15 years, freeing up funds for a down payment. Homebuyers who make contributions to their RRSP by March 1, 2010 can withdraw the funds under the HBP after a period of 90 days.
In addition, the tax refund from contributing to an RRSP can be used towards a down payment, or a lump-sum mortgage payment. No RRSPs? An Invis mortgage professional can show you how to establish an RRSP with borrowed funds, and use the resultant tax refund for a down payment.
Here is a basic overview of some of the HBP rules:
You must be considered a first time homebuyer, i.e. you cannot have owned an owner occupied home in the previous five years.
You must be a Canadian resident.
The property purchased must be for a principal residence.
The RRSP must be repaid within 15 years, with minimum annual payments of 1/15th of the withdrawn amount.
Funds must have remained in your RRSPs for a minimum of 90 days before they can be withdrawn under the Home Buyers Plan.