There are benefits exclusive to first time home buyers designed to assist you with your purchase.
RRSP Home Buyers Plan
- You can borrow up to $35,000 directly from your RRSP if your money has been in your account for a minimum of 90 days before you are withdrawing.
- There is no tax penalty
- You have 15 years to pay the money back into your RRSP
- First time home buyers residing in the same house, can combine their RRSP’s up to a maximum of $70,000.
Essentially, you are borrowing from yourself at 0% interest.
If you are wanting to use your RRSP’s as your down payment, your bank will require you fill out a T1036 form in order to . Here is a link to the Canada Revenue information on how to participate, withdraw funds, and how to repay as well as a link for the withdrawal form:
CRA: What is the Home Buyers Plan (HBP)
First Home Savings Account (FHSA)
As of April 1, 2023, first time homebuyers can save for down payment by depositing funds in a Tax Free Savings account. Unlike regular TFSA’s, the FHSA is tax deductible on your income tax return the year you contribute.
When you are ready to purchase a home, account holders can withdraw funds for purchasing or building their first home tax-free. Any funds not used for purchase, can be transferred tax free to a RRSP or a Registered Retirement Income Fund (RRIF).
In essence, the FHSA leverages characteristics of Tax-Free Savings Accounts (TFSAs) and RRSPs to provide new homeowners additional tax advantages when saving for a down payment.
What we like best about the FHSA, is that unlike the RRSP Home Buyer Plan, funds do not need to be in the account for 90 days prior to being withdrawn.
CRA: First Home Savings Account
Owning your first home is an exciting yet daunting endeavour. The Mortgage Sisters are ready to walk you through the process from beginning to end to carry you through this journey with confidence.