Looking for a down payment on a home? Check your RRSPs
New rules enhance the Home Buyer’s Plan program
If you’re a first-time homebuyer, with the federal Home Buyer’s Plan you may be eligible to withdraw funds from your registered retirement savings plan (RRSP) for a down payment when buying or building a qualifying home. Under the program you can now withdraw up to $25,000 without tax penalties, according to measures announced recently in the 2009 Federal Budget.
Here is a basic overview of some of the 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- The RRSP must be repaid within 15 years, with minimum annual payments of 1/15th of the withdrawn amount.
- Funds must have remained in your RRSPs for a minimum of 90 days before they can be withdrawn under the Home Buyers Plan.
- You will have to complete Form T1036, “Home Buyers Plan (HBP) – Request to Withdraw Funds from an RRSP” available at the Canada Revenue Agency website www.cra-arc.gc.ca in the RRSP section.
