RRSP Home Buyers Plan
The Government’s RRSP Home Buyers Plan allows individuals to withdraw up to $25,000 to use towards a down payment on a new home.
For young couples who are looking to buy their first home, the largest challenge they face is not just finding an affordable to todays hot market, its the challenge of getting their initial down payment. In Toronto, where the median starter home is $550,000 and above, trying to save $25,000 or more can be a real challenge if you are already paying $1500-$2500 in rent. Trying to wait and save more can also become more challenging as the price of real estate only seems to keep rising even as news reports predict doom and gloom. Its always expensive buying your first home and waiting may only price you out of the market altogether.
Luckily, the Government of Canada has created a plan where you are allowed to take out up to $25,000 per person to buy your first home. You may even qualify if you’ve owned a home in the past. Ask one of our agents for more details. Using the RRSP Home Buyers Plan may be just the right thing for a young family to get that much needed down payment for their first home. Owning your own home can mean a great many things to a young family such as putting down roots, building up equity, pride in ownership, and paying your own mortgage rather than your landlords!
Is this program right for you? There is no one right answer and you will have to think long and hard before deciding to save and wait or forgo the tax free increase you enjoy in your RRSP’s today. By taking out the money now, you will forgo the compounding increase inside your RRSP in favour of building equity in your home + the increase in real estate value of your home.
If you are young and retirement is a long way away, withdrawing money from your RRSP be may be the best choice you can make for your family in the long run. As with any Government program, there is always tax implications and the money you take out will have to be paid back or you will incur tax penalties. Although you may not have to put any of the RRSP Withdrawal back in during the first year, you will have to start paying the withdrawal back in equal installments over 15 years.
More information and guidelines are available at http://www.cra-arc.gc.ca/hbp/
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Salim Moorani, BA, MCP | Getting a mortgage can be hard, we make it easy® | Mortgage Broker Lic # M14000543 / Brokerage Lic #12136 | 647-773-9001 | info@RedDogFinancial.ca | www.RedDogFinancial.ca | April 10, 2015