A federal program is in place to assist first time home buyers with the purchase of a home. Under the federal government’s Home Buyer’s Plan, you can use up to $20,000 in RRSP savings ($40,000 for a couple) to finance a down payment on a first home. You are then required to repay your RRSP over 15 years.
You have to ensure that the RRSP funds have been deposited for at least 90 days. You will also have to sign an agreement to buy a new or resale home. Buyers have to qualify the home purchase.
Depending upon your situation, it might be to your advantage to access savings through the Home Buyers’ Plan. For example, if you had already saved $20,000 for a down payment – and assuming you still had enough “contribution room” in your RRSP for a contribution of that amount you could move your savings into a registered investment at least 90 days before your closing date. Then you could withdraw the money through the Home Buyers’ Plan.
Your $20,000 RRSP would then count as a deduction for the year. You could also use any tax refund you receive to repay RRSP or other home buying expenses.
Many home buyers looking to purchase a home in Kamloops are trying to find ways to ensure they have an adequate down payment. First time home buyers can definitely put this technique to use. Ensure, prior to making any major financial decisions, to check with your financial advisor, lawyer or tax specialist. These professionals can determine whether this strategy is practical for your financial situation.