It is well known that when you are a First Time Home Buyer you can use up to $25,000 from your RRSP without paying any personal taxes. However, you will have to repay any amount withdrawn from you RRSP for down payment of a home purchase.
Who is a First Time Home Buyer?
Normally, you have to be a first-time buyer to withdraw funds from your RRSPs to buy or build a qualifying home.
You are considered a first-time home buyer if, in the four year period, you did not live in a home that you or your current spouse or common-law partner owned. This condition is particularly important because even if the house where you live is not in your name but your spouse or common law partner, you don’t qualify for this benefit.
Even if you or your spouse or common-law partner has previously owned a home, you may still be considered a first-time home buyer.
The four-year period:
Begins on January 1 of the fourth year before the year you withdraw funds; and ends 31 days before the date you withdraw the funds.
RRSP withdrawal conditions
- You have to be a resident on Canada at the time of the withdrawal.
- You have to receive or be considered to have received, all withdrawals in the same calendar year.
- You cannot withdraw more than $25,000.
- Only the person who is entitled to receive payments from the RRSP can withdraw funds from an RRSP. You can withdraw funds from more than one RRSP as long as you are the owner of each RRSP. Your RRSP issuer will not withhold tax on withdraw amounts of $25,000 or less.
When do you have to repay the amount withdrawn?
Generally, you have up to 15 years to repay to your RRSP(s) the amount you withdrew from them for your down payment. However, you can repay the full amount into your RRSP at any time.
Example
If you withdrew $15,000 from your RRSPs for the down payment of your house you will have to repay to your RRSPs $1,000 per year for the next 15 years.
Read More,,,
https://dominionlending.ca/news/use-of-rrsps-for-the-down-payment-on-a-property/
