The federal government has a program in place that is specifically designed to help unlock savings and make it easier to buy a home. It's called the Home Buyers' Plan.
The Home Buyers' Plan (HBP) is a program that allows you to withdraw up to $25,000 (after January 27, 2009), from your registered retirement savings plan (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability.While many have heard of this plan, understanding what it can really do for you is a bit more elusive. Jesse Merson is a Mortgage Advisor with BMO Financial Group and she does an outstanding job outlining exactly how the RRSP Home Buyers' Plan works and who it can help;
If you fall into either of the following scenarios, you may be able to take advantage of the Home Buyers Plan and benefit from significant tax breaks:The HBP remains one of the only ways to access your RRSP tax free to kickstart your move into the real estate market. Read more of Jesse's insights on the Home Buyers' Plan via the Move Smartly blog post: The RRSP Homebuyers Plan: An Excellent Way to Save for the Down Payment on Your First Home
* You do not have enough money for a down payment, but have money in a Registered Retirement Savings Plan (RRSP).
* You have money for a down payment and have unused RRSP contribution room.
How does the Home Buyers Plan work?
If you fit into the first scenario above, you and your spouse or common law partner, can each withdraw up to $25,000 from your RRSP's to help build or buy the same first home for a combined total of $50,000.
If the second scenario is more like your current situation, consider contributing the money you have saved into an RRSP and potentially benefit from a substantial tax refund. The contribution must be within your RRSP contribution limit, which can be found on your most recent Notice of Assessment from the Canada Revenue Agency.
With aging Boomers hoarding cash and Gen-X'ers hitting their income stride, we are undeniably hurtling toward a retirement bonanza. This blog is dedicated to our growing obsession with life after work and the best path to get there.
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