The RRSP Home Buyers' Plan

Buying your first home?
Here's a down payment option.

Under the RRSP Home Buyers' Plan, you and your spouse may each be able to withdraw up to $20,000 tax-free from each of your RRSP and use it for the down payment. Provided that you meet the conditions for participating in the Home Buyers' Plan, there are no tax penalties due  to a withdrawal from your RRSP, and you can take up to 15 years to pay it back into your RRSp in annual installments.

The catch is that you and your spouse must each be a first-time home buyer. You are considered to be first-time home buyer if you have not owned a principal residence in the past five calendar years prior to the withdrawal.

For example, here's how it works.

You could withdraw $20,000 from your Registered Retirement Savings Plan.

Use it to top up your down payment and other costs associated with buying a home.

Repay $1,334 per year for the next 15 years (beginning in the next taxation year).  You have a period of not more than 15 years to repay to your RRSP the amount you withdrew under the Home Buyers' Plan. Generally, in each year if your repayment period, you must repay an amount equal to 1/15 of your origionalb Home Buyers' Plan balance until the full amount is repaid to your RRSp. Your repayment period starts the second year following the year you made your withdrawals.

The RRSP contribution must be made a minimum of 90 days before it is withdrawn. A qualifying home includes existing and newly built homes, townhouses, condominium units and mobile homes that are located in Canada.

Did you know that the RSP money can also be used to pay down debt? It doesn't have to go towards the down payment or closing costs. As debt is at a higher interest rate, it makes more financial sense to pay off debt rather than top up your down payment. You just have to withdraw it at the time of purchasing your first house.

Contact Todd Payzant, your Mortgage Development manager at the Scotiabank, for details on the RRSP Home Buyers' Plan today.

  (705) 525-5553
todd.payzant@scotiabank.com

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