The short answer to this question is "maybe". Whether or not you qualify to use your RRSP's towards the purchase of a home is dependant on a couple of factors.
The Home Buyers' Plan (HBP) was designed to let FIRST-TIME HOME BUYERS withdraw up to $25,000 from a registered retirement savings plan (RRSP) to buy a principal residence. This withdrawl is not taxed and must be paid back to your RRSP in 15 years.
After an initial grace period of the year in which the withdrawl was made (plus one more full calendar year), you are required to pay back the funds borrowed (beginning the second year following the year of withdrawl) over a period of 15 years by depositing 1/15th of the amount withdrawn, annually, to your RRSP. Prepayments are allowed at any time without penalty. For example, a $25,000 HBP withdrawl from your RRSP requires a repayment of $1,667 every year for 15 years ($25,000/15 years=$1,667). Any missed repayments are included in your income tax for that year.
Maxium for two spouses (or any two buyers) is $50,000.00. Any such qualified withdrawl from an RRSP is not subject to tax at time of withdrawl.
The funds can be applied to the downpayment, land transfer tax, legal fees and disbursements, improvements to the home, even furniture and appliances. The Home Buyers' Plan cannot be used to purchase investment or rental property.
You must buy or build before October 1 of the following year after your withdrawl. For example, if you withdrew funds from your RRSP in June 2013, you must buy or build before October 1, 2014.
For more information, visit Revenue Canada's website at http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/ or call 1-800-959-8281.
If you're a first-time home buyer looking for the perfect home, call The Dianna Mandzuk Team. We can help make your dreams of home-ownership a reality! 905-433-2579.
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