Home Buyer's Program: What Do You Need to Know About It?
November 27, 2024 | Posted by: Sherry Corbitt
Are you a first-time buyer thinking about buying this year? Do you have your down payment set aside and are just waiting to take that big step? You may have a minimal opportunity that is time-sensitive and doesn't apply to everyone.
The Home Buyers Program
The government offers a program that lets first-time buyers drawl up to $25,000 from their registered saving plans, known as your RSP, to use to purchase or build a home.
Why is this so time-sensitive? Because I have a plan to help boost your savings by thousands of dollars! When you put money into an RSP, you typically get a break on your income taxes, and in most cases, it reflects as a refund.
The estimate is $250 back in refund for each $1000 you put into an RSP. So if you, for example, if you have $20,000 set aside for your down payment and NOT in an RSP yet, you can deposit it and get a more significant tax return this spring, therefore boosting your overall savings. To confirm exactly how much you could get back, consult a tax preparation firm or call my office to have our tax preparer, Lori, run the numbers for you.
Imagine if you put the $20,000 you had into an RSP and your tax refund come April is now $6200 more than it would have been?! Then when the time comes for you to buy your home, you withdraw the RSPs using the Home Buyers Program.
What Do You Need to Know About The Program?
Firstly, you need to pay the RSP money back, but you have 15 years to do it. Also, the money has to be in your RSP account for a minimum of 90 days before you can withdraw it. So if you put it in now and want to purchase it for July, that is entirely acceptable.
Something to be aware of is that depending on where you put your RSPs, you may have service fees for withdrawing them. I work with some fantastic financial planners that I can steer you towards to explain all your options and tell you what you need to know. Please reach out to me if you have any questions, I am always here to help with your mortgage needs!
Your Broker for Life,
Sherry Corbitt
Sources:
Government of Canada (2021). CRA on Canada.ca. Retrieved from http://www.cra-arc.gc.ca/hbp/
