Many first time home buyers do not realize you can use up to $25,000 from your RRSP (Registered Retirement Savings Plan) and withdraw funds from your TFSA (Tax Free Savings Account) as well. Keep in mind, the rule is $25,000 dollar withdrawal per person. For Example, if you and your spouse are purchasing a home, you both can use two accounts (each account has to be under a separate name) can withdraw the $25,000 dollars. This means that together you can have $50,000 dollars from your RRSP’s as down payment! Same rule applies for the TFSA accounts.
This rule however, comes with stipulations. You must pay the RRSP and TFSA back within a certain period of time. Furthermore, the funds must have idled in the account for a minimum of 90 days before it can be taken out. Although these may sound like a Debbie-downers, the good news is the tax breaks that come with using your RRSP and TFSA as down payment for your new home are incredible! Sometimes getting back $20,000 dollars, which then can be used to put back into your RRSP OR TFSA. Of course, this depends on your tax bracket among other considerations. The advantages of using these investments as your down payment are a huge positive in the real estate and financial world, backed with government support.
Contact Robert Clancy today for your first time home buyer needs!