A government program, the Home Buyer’s Plan allows home buyers to withdraw up to $25,000 from their Registered Retirement Saving’s Plan (RRSP). They can use the funds to purchase or builda new residential property.
However, you need to follow certain rules and regulations for withdrawing funds from the retirement plan. First off, you are required to sign a written agreement that clearly states whether you will be buying or building your new home.
In addition to this, you must occupy this residential space no later than a year, after purchasing or constructing your new home.
In order to avail maximum benefits, you have to be a first-time buyer. If you (and your spouse) have previously (past 5 years) owned a home, you are not a first-time buyer.
If you meet these conditions, you can withdraw up to $25,000 tax-free from your RRSP for a new house. Couples, including common-law, are allowed to withdraw up to $50,000.
Keep in mind, you will not have to pay income tax on these amounts since you will have to repay the money into an RRSP in the future.
Existing homeowners can also use the Home Buyer’s Plan to buy an accessible home or a house for a disabled or dependent relative. However, the concerned individual must qualify for the Disability Tax Credit. At the same time, the new home must be more accessible to their care.