Can I use my RRSPs for my down payment?
One way to add to your down payment amount is to tap into your RRSPs. While it’s true that normally you’d probably pay penalties and income tax on any RRSP withdrawal, there is an exception to the rule. As a first-time homebuyer, you may withdraw up to $25,000 ($50,000 per couple) from your RRSPs under the Home Buyers’ Plan. These funds can be used to increase your down payment and are not counted as income and subject to income tax. But there are some conditions attached that you should be aware of:
- The amount withdrawn must be repaid within 15 years from the date of withdrawal.
- You must purchase your home by October 1st in the year following your withdrawal.
- You must start repaying your withdrawal in the second year after your withdrawal.
- Repayments are not tax-deductible.
For complete details please visit the Canadian Revenue Agency website.
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