RRSP First Time Home Buyers Plan
Available only to first time home buyers defined as those who have not owned a home and lived in it as a principal residence in any of the 5 preceding calendar years. Further:
- Individuals can only participate in the Plan once.
- Maximum withdrawal amount is $25,000
- If your spouse is also eligible you can each withdraw $25,000 for a total of $50,000
- The money you take out of your RRSP must have been deposited at least 90 days prior to the withdrawal
Eligible Homes for this Plan
- Any existing or new home located in Canada.
- Can be detached, semi-detached, townhouse, condominium, mobile home, or co-op
- Must be occupied as principal residence within one year after buying or building the home
- Allows you to purchase a home with money “borrowed” from your RRSP
- There is no withholding tax on the withdrawn amount and no tax liability when you repay the money to your RRSP over a period of not more than 15 years.
- The repayment begins the second calendar year following the year in which the withdrawal is made.
- June 2010 withdraw $15,000 from RRSP to purchase a home
- No repayment to RRSP in 2011
- 2012 repayment is $1,000 ($15,000-15 years)
- Payment is due by December 31, 2012
- If you repay only $700 in 2012 you must report the $300 shortfall as income for 2010
- Year 2013 payment will be another $1,000