Sunday’s= Personal Tax
Generally I tell people that a TFSA is a better idea than an RRSP. However if you are a person who does not own a home and plans to buy one, the RRSP is something to consider.
It is possible to borrow money from your own RRSP for two things: buying a home and getting education. The terms used are Home Buyers and Lifelong Learning. I am talking about the Home Buyers option today.
The RRSP (Registered Retirement Savings Plan) is usually used as a savings plan for retirement. Duh. You send some money to a financial institution and then invest it for you. You get a tax deduction for the amount of your contribution and you pay tax on any money you withdraw – unless you are withdrawing the RRSP amount for the Home Buyers or Lifelong learning plans. You make RRSP contributions and you pay less tax, if you pay less tax you have more money. Once the money has been withdrawn for a home purchase it has to be repaid to the plan, over 15 years, which is a reasonable time period. If the amount is not repaid each year, the home buyer can pay tax on it instead.
Saving money for a down payment is a challenge for many younger Canadians who wish to buy a home. Being able to get a deduction for RRSP contributions is one way to make this easier.