Q – I am looking at buying my first house. Some of my friends have used money from their RRSPs to access the federal government’s Home Buyers’ Plan. How do I know if I qualify? – Sam R., Burlington, Ontario
A – The Home Buyers’ Plan (HBP) was introduced by the federal government in 1992. This plan allows first-time home buyers to borrow up to $25,000 from their RRSP tax-free (except for locked-in accounts). If you are purchasing a property with a spouse, then you can access up to $50,000. This can go a long way to fund a down payment.
There are, of course, many rules and regulations to follow, but in essence you borrow the money from your RRSP and pay it back over a maximum period of 15 years beginning in the year after the withdrawal. You qualify if you or your spouse have not owned or occupied a home as your principal residence in the past four years, or if you are buying or building a home for a disabled person that is related to you. However, an HBP may not be for everyone, as David West pointed out in an articlelast year. If in doubt, consult a financial planner to help you decide your best course of action. Happy house hunting! – R.T.