If You Don’t Have a House You Should Have an RRSP

The RRSP Home Buyers’ plan is a good tool to help save money for a down payment on a house. When you contribute to the Registered Retirement Savings Plan (RRSP) you get a personal tax deduction.  You can also contribute the tax you save to the RRSP forming a virtuous cycle of reinvestment.

When the time comes to buy your first house money is withdrawn from the RRSP without tax being paid. Typically when you withdraw funds from an RRSP you have to pay income tax on the withdrawal. A withdrawal for the Home Buyers’ Plan is an exception.  The amount you withdraw for the down payment must be repaid over the following 15 years. If the amount is not repaid then it is taxable.

Housing prices appear to be going up so down payments are increasing as well. This is strategy to assist with finding the money for the down payment.

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