馃攳
RRSP Withdrawals: The Home Buyers Plan | Your Money, Your Choices with Susan Daley - YouTube
Channel: Susan Daley
[0]
Buying a home, going back to school, emergencies,
retirement鈥here are lots of reasons why
[5]
you might want to use money currently sitting
in your RRSP.
[8]
In today鈥檚 video, I鈥檒l outline the rules
around getting money out of this account to
[13]
buy a home.
[14]
I鈥檓 Susan Daley and this is Your Money Your
Choices.
[21]
Now I鈥檓 not urging you to raid your RRSP
for anything before retirement, but there
[26]
are some rules around pulling money out of
this type of account that are useful to know
[31]
if you have one or plan on using one in the
future.
[34]
All withdrawals from the RRSP are included
in your income for tax purposes, so you鈥檙e
[39]
taxed at your marginal rate.
[41]
If you pull $10,000 from an RRSP, and you're
already earning a $50,000 income, your taxable
[48]
income is then $60,000.
[50]
Your marginal tax rate in Ontario is 29.65%,
so you鈥檇 owe $2,965 in taxes on that withdrawal.
[57]
There are two exceptions to this: The first
is if you are using the RRSP to fund the down
[62]
payment on your first home.
[64]
The second is if you are pulling money out
of your RRSP to pay for education.
[68]
Today I鈥檒l focus on the more popular plan,
the Home Buyers Plan.
[72]
The Home Buyers Plan allows you to borrow
money from your own RRSP to put a down payment
[77]
on your first home.
[79]
It鈥檚 like an interest free loan to yourself.
[81]
In order to be able to participate in this
plan, you must meet the eligibility conditions.
[87]
These state that you must be a first time
homebuyer with a written agreement to buy
[91]
or build a qualifying home for yourself, OR
you must have a written agreement to buy or
[96]
build a qualifying home for a related person
with a disability.
[100]
You must also intend to occupy the home as
your principal place of residence within one
[106]
year after buying or building it.
[108]
A first time home buyer is someone who in
the previous four years did not occupy a home
[113]
that you or your current spouse or common-law
partner owned.
[117]
I link to the CRA website that outlines these
rules in more detail in the description below.
[122]
It is possible that you might be a first-time
homebuyer and your spouse is not.
[126]
There are a number of other conditions that
have to be met to be allowed to withdraw funds
[131]
from the RRSP under the Home Buyers Plan.
[134]
You have to be a resident of Canada at the
time of withdrawal
[138]
You have to receive all withdrawals in the
same calendar year
[141]
You cannot withdraw more than $25,000
[144]
You must be the person entitled to receive
the funds from the RRSP (not your spouse)
[149]
Normally you can鈥檛 withdraw from a locked-in
RRSP or a group RRSP
[153]
Your contributions must stay in the RRSP for
at least 90 days before you can withdraw the
[158]
funds
You have to withdraw funds within 30 days
[161]
of you, your spouse or common-law partner
owning the home
[164]
You have to buy or build a home before October
1st of the year after the year of withdrawal
[170]
If you make a withdrawal and the conditions
are not met, the withdrawal will be included
[174]
as income on your tax return.
[176]
Once you make a proper withdrawal, you have
to pay back the loan over 15 years (paying
[181]
1/15th of the withdrawal amount every year),
starting the second year after your withdrawal.
[187]
So if you withdrew in 2016, you鈥檇 have to
start repayments in 2018.
[192]
The maximum amount you鈥檇 have to pay each
year is $1,667.
[197]
If you repay less than the required annual
amount, the difference will be included as
[201]
income for the year and you will be taxed
on it.
[204]
The problem with using the Home Buyers Plan
(especially if you contributed to your RRSP
[209]
with the intention of using the funds for
retirement) is that you lose tax-free growth
[214]
on the funds you withdrew, meaning you鈥檒l
have less money available for retirement.
[219]
Whether or you should use your RRSP for the
Home Buyers Plan or if you should pull money
[224]
from other savings will depend on your situation,
and you should talk to an advisor if it鈥檚
[230]
right for you.
[232]
In the next video I鈥檒l outline the rules
around pulling from your RRSP if you鈥檙e
[237]
using the Lifelong Learning Plan. So be sure to subscribe!
[240]
I鈥檓 Susan Daley and this has been Your Money,
Your Choices.
Most Recent Videos:
You can go back to the homepage right here: Homepage