Saving for your first home is an exciting time, but there is a lot to think about. It’s important to know about all of the resources available for you to help make saving a little bit easier. One such resource is the RRSP First Time Home Buyer Program.
Why RRSP?
Not only does this program allow you to essentially “borrow from yourself” in order to make a down payment on your home and offer a very reasonable pay-back plan… You can also use your tax deduction to increase the amount you’re able to save.
Give Yourself a Loan
When purchasing your first home, you can borrow from your RRSP penalty-free. Repayment will begin one year after you take ownership of the home and you will have 15 years to repay the amount to your RRSP. If you’re unable to make the minimum yearly payment for whatever reason, you’ll be taxed on this amount as income.
Save More For Less?
Another reason putting your house savings in an RRSP can help you save for a down payment is, when you contribute to your RRSP, you can claim that amount as a tax deduction. You don’t need to claim it in the same year you contribute though. You can wait and claim the deduction in a future year if you prefer.
When you claim that deduction, you get that money back on your tax return. You can then contribute this returned amount to your RRSP as well, meaning you can essentially have more money to put toward a down payment in the end, while saving less than you would need to if you kept your savings in another sort of account.
Watch this video to learn more about how the program works and it can be a huge help for everyone saving for their first homes right now! Don’t forget to subscribe to our channel for new videos each week.
It is always a good idea to contact your advisor to discuss your personal or business finances. We stay up to date on the current government programs available and are always happy to help our clients get started. If you’re in need of an accountant, check out our services page or book a “Get to Know You” meeting with us by clicking here!