First-time homebuyers tap your RRSP to help with your home purchase

First-time homebuyers tap your RRSP to help with your home purchase

Your thinking about buying your first home... Wish you had saved up a good down payment. Maybe you have, but don't know it. To help first-time buyers get into home ownership, the federal Home Buyers' Program lets you access tax-free money for use towards the purchase of your first home. 

As a first-time homebuyer, you are allowed to withdraw money tax-free from your RRSP, provided you adhere to the repayment plan. You can withdraw up to $25,000 from your plan. If your spouse qualifies as a first-time homebuyer, then he or she will also be able to withdraw $25,000. Between the two of you, you could possibly have a total down payment of $50,000. 

There are conditions, you must enter into a written agreement to buy before you can withdraw money. And, you must meet the repayment terms. Repayment begins the second year following the year of withdrawal. You have up to fifteen years to repay, and each annual repayment must be at least one-fifteenth of the total withdrawal, otherwise, you have to include each repayment amount as income for that year.

A detailed booklet is available on the Canada Revenue Agency website.