Home Buyers Plan Canada

 

 

Home Buyers Plan Canada

 

So I think everyone knows that it is currently a buyers market.  Historically low Alberta Mortgage rates have kept Canadians buying.  The Stephen Harper has also approved an increase in the RRSP able to be used in the new 2009 stimulus plan.  The old Home Buyers Plan only allows you to use $20,000 of your RRSP’s for a down payment and now they have allowed Canadians to use up to $25,000 tax free! 

 

With the huge drop in the market and the very slow recovery this could also be a 2009 stimulas plan for your RRSP’s.  With house prices being so low investing in Real-estate could really help your portfolio.  Most Canadians dream of owning their own home so this is one way to accomplish it even if you don’t have a lot of cash for a down payment.  With a 25,000 from RRSP’s you could qualify for property for $250,000 on a 10% down or even up to $500,000 with a 5% down.  Also keep in mind that if you are married or in a partnership you can use up to $25,000 each!  This would then double the qualifying ability or allow you to put more done to avoid CMHC fees. 

Will Canada ever reduce the amount of the RRSP’s  for their Home Buyers Plan?  Who knows but it is a great tool now and could be the difference of you being able to qualify or not.  Keep in mind there are a few restrictions. 

1.  You have to be a first time home buyers to take advantage of the Home Buyers Plan.  So if you have never owned a home here in Canada you are deemed as a First time Home buyer.  Also keep in mind this is only for Canadian citizens.

2.  You have to pay that money back!!  Did you think the government would just let you take the money out tax free?!?  The Home Buyers Plan according to the government website shows that you 15 years to repay the initial amount taken from your RRSPS This starts the 2^nd year after the year you have withdrawn the money and then you owe back 1/15 each year after that until you’ve paid it all back.  You can always pay it back faster if you would like.  If you don’t pay you will have that amount missed added to your income and you will be taxed accordingly. 

3.  You have to purchase or build the house before October of the following you took the RRSP’s from the account.  You can also use any of your contributions up to 90 days before you withdraw the money for the purpose of putting it towards your property. 

In summary the Home Buyers Plan seems to be encouraging more Canadians to buy which is great for the economy and for peoples investments.  It looks like the 2009 stimulus plan seems to be working.  Please visit www.mortgagebrokerrate.com for more information.