Hello Vancouver, it's RRSP time in Vancouver and this question has comes up for me today...and then I conveniently got a good reminder summary today from First National bank so I thought I should pass it along for the Canadian First Time Home Buyers...
First time home buyers who are Canadian residents are allowed to withdraw up to $25,000 from their RRSP TAX FREE, through Canada's Home Buyers Plan (HBP) a Buyer and their spouse can each withdraw up to $25,000 (as of the 2009 federal budget) to build or buy a qualifying home.
Withdrawing the money from your RRSPs through the HBP is fairly easy. Go to the financial institution where the money in RRSP is held and fill out the T1036 form for each withdrawal if you have more than one RRSP account or if two Buyers are withdrawing. Then make sure to file an income tax return for the year of the withdrawal and each year thereafter, until the RRSP is fully repaid.
Keep in mind there are a few rules:
- To qualify, you must be a first time home buyer and a resident of Canada at the time of withdrawal.
- You MUST purchase/build the home before October 1st after the year of withdrawal. You only need to repay 1/15 of the borrowed amount starting in the second year after the year of withdrawal, or you'll have to add the amount as income.
- RRSP contributions of up to 90 days before the withdrawal date can be used towards the HBP.
This is one of the only ways to withdraw from your RRSP tax free and a great way to get yourself into the real estate market. For more information about the HBP program go to the Canada Revenue Agency's website.
Vancouver Mortgage Broker