As part of the Government of Canada’s Home Buyer’s Plan, withdrawals from an individual’s registered retirement savings plan (RRSP) can be made to finance the purchase of a new home. For this to take place, several steps must be completed:
- Determine the type of withdrawal you would like to make. This can be done as either a single amount, or as a series of withdrawals throughout the calendar year.
- To begin the withdrawal process, fill out Form T1036. This form is legally known as the Home Buyers’ Plan (HBP) Request to Withdraw Funds from an RRSP. T1036 must be filled out separately for each withdrawal.
- After filling out the first section of T1036, bring it to the issuer of your RRSP. They will fill out the second section.
Notes on RRSP Withdrawals:
- A couple will be able to withdraw up to $35,000 each from their RRSPs, for a total of $70,000, allowing them to contribute more toward their down payment, making home ownership possible.
- The minimum annual repayment rate is 1/15th of your loan. Start making repayments in the second year after the tax year you made your initial withdrawal.
- If one withdrawal is made in one year and another in January of the following year, the Canada Revenue Agency considers both withdrawals to have been received in the first year.
For more information about Withdrawing from RRSPs, visit the CRA’s web page that features a deep dive into the topic.
To learn more about the process of buying preconstruction condos and homes, check out this article.