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Home buyers plan - changes coming

Updated Friday, October 30, 2015
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What is the Home Buyers' Plan?

Are you having trouble saving for a down payment? With the home buyers plan you can use up to $25,000 of your RRSP savings ($50,000 for a couple) to help finance your down payment on a home.

There are rules to follow, for instance you need to have the money in your RRSP at least 90 days prior to purchase and you need to have an accepted offer on a home. (agreement of purchase and sale)

You will pay no tax on this withdrawal as long as you repay it within 15 years. Make sure you plan ahead for the repayment.

Using your RRSP's as a down payment may be a great option as you have the ability to draw from some of your existing resources. It may even allow you to put 20% down to avoid paying for the default insurance premium. Even if you already have enough money for your down payment, it may make sense to access your RRSP savings through the Home Buyers' Plan.

For example, if you have already saved $25,000 for a down payment you could move that savings into an RRSP at least 90 days before your closing date. (provided you have the contribution room, check with your financial advisor) Then, simply withdraw the money through the Home Buyers' Plan. The $25,000 RRSP contribution will count as a tax deduction for this year. Use any tax refund you receive to repay the RRSP or other expenses related to buying your home. But remember, you will have to pay that amount back to your RRSP over the next 15 years.

It's very important to talk to your financial advisor to make sure that this strategy makes sense for your own situation as there are many things to consider.

The new liberal government plans to make some changes to the Home Buyers Plan allowing people to withdraw from their RRSP’s if they have a significant, unexpected life event like the death of a spouse, a divorce or if you need to move to care for an elderly relative or for work.

I will continue to update you as news become available. Follow my blog for other Sarnia-Lambton real estate news.


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Julie Jenkins

Sales Representative

EXIT Realty Twin Bridges Brokerage

Direct 519-328-4963

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Julie Jenkins

Julie Jenkins