Raiding Your Retirement Nest Egg: The Home Buyer's Plan (HBP)
So, you've decided to take the plunge and buy a house. Congratulations! Now, the fun part: figuring out how to pay for it. Let's face it, unless you've been stockpiling gold bars under your bed (hey, no judgment!), a down payment can feel like a mythical beast – elusive and expensive.
Enter the Home Buyer's Plan (HBP), your friendly neighborhood government program that lets you borrow from your own RRSP (Registered Retirement Savings Plan) to help finance your dream home. Think of it as a short-term loan to your future self, with a few hilarious conditions (we'll get to those later).
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| How To Borrow From Rrsp When Buying A House |
But First, Why Your RRSP?
Remember all those tax-deductible contributions you've been faithfully making to your RRSP? Well, the HBP lets you tap into that sweet, sweet tax advantage and use it for your down payment. It's like getting a tax break and a high five from the government, all rolled into one.
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How Much Can I Borrow (and Not Get in Trouble)?
Here's where things get interesting. You can borrow up to $35,000 from your RRSP, or $70,000 if you're buying with your spouse/common-law partner (who also has an RRSP, of course). Now, before you start picturing a swimming pool in your backyard, remember: this is a loan, not a free-for-all. You gotta pay it back within 15 years.
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Think of it like this: it's like borrowing money from your future self to buy a house. Just promise future you that you'll stop eating avocado toast for a while and make those repayments. They'll appreciate it.
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The Not-So-Fine Print (Because There's Always Fine Print)
Now, for the not-so-fun part:
- The money you withdraw counts as taxable income, so you'll need to factor that into your budget.
- You have to repay the borrowed amount within 15 years, or the CRA (Canada Revenue Agency) will consider it income and tax you on it. Ouch.
- The money you withdraw must have been in your RRSP for at least 90 days before you can use it for your down payment. No last-minute scrambles allowed!
So, Should You Raid Your RRSP?
This is a big decision, and it's not one to take lightly. Consider all your options and talk to a financial advisor before making the leap. But hey, the HBP can be a great way to bridge the gap and make your homeownership dream a reality. Just remember, borrow responsibly and don't forget about future you (who might be craving some avocado toast in 15 years).
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