Now that you want to buy a home it’s time to look at some creative ways to obtain your down payment.
Sometimes it makes sense to withdraw from your investments to purchase a home, but a good discussion with your investment advisor and/or accountant is highly recommended. The specific investment we’re talking about in this situation is the RRSP withdrawal for a house purchase.
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The amount you use must be in the RRSP 90 days before using it for a down payment.
- For example, if you are doing monthly contributions, the amount 3 months prior to closing could only be used. Not the additional contributions between the periods.
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Traditional first-time home buyers have access to use this perk.
- We are talking about traditional, meaning they have not owned a home before. We will get into the other non-traditional qualifications after this.
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If you have been separated and have not owned nor lived in the spousal home for 4 years, you are considered “allowed again”.
- This is considered a non-traditional first-time home buyer.
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The maximum limit used to be $35,000.00 but now it is $60,000.00.
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You are not taxed on this withdrawal, but there are stipulations.
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You are required to pay it back into your RRSP.
- It does not matter if it’s the same account, but you need to pay back the full amount. The time period is 15 years, and if it’s not returned in this time you will be taxed on whichever amount was not paid back. This would be a doozy because inevitably your income goes up. In the end, make a plan to pay it back. Save on taxes.
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The form is easy to fill out. Your Broker/ Agent can do this for you. It’s called a T-1036.
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It usually takes 3 to 4 business days to complete the transfer into your account.
- We have seen it happen quicker, but give extra time for hiccups.
At Mortgage Suite let us get you pre-approved, and make sure we go through all the down payment options before you fund.
