Home Buyer RRSP Plans

Home Buyer RRSP and Tax Savings Opportunities

There are three government savings plans beneficial for first time home buyers.

The first one is the Government of Canada’s Home Buyers’ Plan called HBP.  If you have been religiously putting funds into your RRSP and are now looking to buy your first home then you may wish to consider taking advantage of this excellent opportunity. HBP which is a plan for first time home buyers or persons with a disability, to take advantage of a tax benefit that allows them to withdraw funds from their Registered Retirement Savings Plan to buy or build a home. 

Of course there are a few requirements with the most important being that the funds must be in your RRSP 90 days before they can be withdrawn to purchase your new home. The maximum you can borrow is $25,000 per new home buyer. The funds must be repaid over a 15 year period at the rate of at least 1/15 of the total amount per year and repayments start on your second year of the withdrawal.

The second savings for first time home buyers is from the Government of British Columbia and it may reduce or eliminate the Property Transfer Tax, (PPT) that must be paid when purchasing a home. The PPT is 1% on the first $200,000 and 2% on the balance of the purchase price, so as an example, for a $400,000 sale, the PPT would be $6,000.  If the properties market value is less than $475,000 then the PPT is fully exempt, which is huge savings for first time home buyers. Partial exemptions are also eligible up to $500,000.

The third savings is only for first time buyers of a new or substantially renovated home and is a GST new housing rebate with the maximum tax rebate of $10,000 which is claimed when filing your income tax. Please remember to alert your accountant to this possible savings when you’re filing your annual taxes.

For all the details, conditions and benefits of these plans please contact me today.

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