Toronto Real Estate

If you’re a first time buyer in the Toronto Real Estate Market, you may be wondering, how can I afford to buy a property when I have almost no down payment. Some lenders are now offerering a no money down mortgage but there is a better way. Consider using money from your RRSP for a down payment. Here’s how.

The Federal Home Buyers Plan

The Federal Home Buyers Plan allows first time home buyers to withdraw up to $25,000 from their RRSP for the purpose of buying or building a qualifying home. The primary benefits are that the RRSP issuer will not withhold tax on the amount nor will you have to claim the amount as income. The amount must be repaid to the RRSP within 15 years with a minimum annual payment of 1/15th of the amount withdrawn.

If a repayment is not made for a given year the minimum repayment is included as taxable income for that year.

Participation

To participate you have to withdraw the amount from your RRSP using form T1036 Applying To Withdraw An Amount Under The Home Buyers Plan.

Give the completed form to the RRSP issuer along with the certification that you meet or intend to meet certain conditions as follows:

Conditions

You have to make your withdrawal request in the same year you wish to participate in the Home Buyers Plan.

• You cannot have previously participated in the plan in previous years.
• You have to be a resident of Canada.
• You have to enter into a written agreement to buy or build a qualifying home
• You can withdraw a total of $25,000.
• Multiple withdrawals are allowed.
• Each of you and your Spouse can participate in the Plan and withdraw $25,000 from your own RRSPs.

You have to be considered a First Time Home Buyer

A qualifying home is a housing unit located in Canada. Existing homes and homes under construction are both qualifying homes and can be either:

• Single Detached Family Homes
• Semi Detached
• Town Home
• Mobile Home
• Condominium Unit
• Apartment in a Duplex, Triplex, Fourplex or apartment building.
• Share in a Cooperative Housing Corporation, provided the share entitles you to posses, and gives an equity stake in, a housing unit.

Who is Considered a First Time Home Buyer?

You are considered a first time home buyer if you have not owned home while you occupied it as your principal place of residence for five years. At any time in the fifth calendar year since you last owned a home you can qualify.