I have several questions in my mind about RRSP and FTHB plan.
Me and my husband has unused room for RRSP from last few years and we never contributed for RRSP. we are planning to go for our first home by next summer and I am wondering if putting good amount in RRSP can be a good idea in order to bring down the tax payble and get a good tax return for adding up to down payment. Please help me with following questions I have in my mind before going forward.
what's the minimum time frame money needs to be in RRSP in order to be eligible for FTHB?
what type of securities should we consider for such a small time since we will be putting money before end of Feb and withdrawing after few months...
since withdrawn money needs to be back in RRSP in 15 years, is it divided equally in 15 years or total in 15 years?
what if we put the whole money back in RRSP within few years and want to withdraw it later?
All suggestions are highly appreciated!!!!!
Location: Western Hemisphere
Posted on: 16-12-09 09:32:40
Quote:
Originally posted by Aanchal
I have several questions in my mind about RRSP and FTHB plan.
Me and my husband has unused room for RRSP from last few years and we never contributed for RRSP. we are planning to go for our first home by next summer and I am wondering if putting good amount in RRSP can be a good idea in order to bring down the tax payble and get a good tax return for adding up to down payment. Please help me with following questions I have in my mind before going forward.
what's the minimum time frame money needs to be in RRSP in order to be eligible for FTHB?
what type of securities should we consider for such a small time since we will be putting money before end of Feb and withdrawing after few months...
since withdrawn money needs to be back in RRSP in 15 years, is it divided equally in 15 years or total in 15 years?
what if we put the whole money back in RRSP within few years and want to withdraw it later?
All suggestions are highly appreciated!!!!!
http://www.sandyhines.com/rrsp.htm
The above link provides a summary. I am not sure how long the funds have to be in RSP before you can withdraw for the loan. However, your repayment should be at least 1/15 th (annually) of the amount you borrow. You may repay more in any year. If you repay less, the shortfall is taxable income.
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Dimple2001
Quote:90 days
Originally posted by Aanchal
what's the minimum time frame money needs to be in RRSP in order to be eligible for FTHB?
Quote:Cash or no fee Money Market only
what type of securities should we consider for such a small time since we will be putting money before end of Feb and withdrawing after few months...
Quote:Minimum 1/15th needs to be paid every year.
since withdrawn money needs to be back in RRSP in 15 years, is it divided equally in 15 years or total in 15 years?
It's like a mortgage payment to your RRSP (rather, the Govt.)
Quote:You will not qualify for the HBP withdrawal again, unless you sell your house and rent for a few years.
what if we put the whole money back in RRSP within few years and want to withdraw it later?
You could take it out under the higher education scheme.
Or you can always withdraw it (and pay any due tax penalty)
Keep in mind that borrowing against RSP for purchasing real estate implies a shift in your asset allocation from cash (or whatever security form your RSP contribution is in currently) into illiquid real estate.
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
RRSP AND HOME BUYER PLAN
Follow this http://www.cra-arc.gc.ca/E/pub/tg/rc4135/rc4135-09e.pdf to get comprehensive and latest information about the Home Buyer Plan.
Using RRSP for FTHB is a good financial planning as it gets you a good refund on your down payment which you need to put for house buying. I always advise my clients to do it where ever possible.
The funds have to remain in the RRSP plan for a minimum of 89 days to be considered eligible for HBP. The funds can be invested in any eligible investment vehicle but as you want to take them out for HBP in near future, you should keep them in RRSP savings account only.
Rest all the information is provided in links given above.
Good Luck.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
