Using Your RRSP To Buy a First Home
Great article in the National Post by Garry Marr.
Canadians are allowed to take up to $25,000 out of their RRSP to buy a home. This means $50,000 per couple. This sum must be paid back to your RRSP over the next 15 years or penalties will apply.
For a young couple with a downpayment and room in their RRSPs they can make a $50,000 contribution to their RRSP ($25,000 each) and generate a tax refund a few months later of up to $20,000 ($10,000 each), assuming both people paying some income tax in the highest tax bracket.
The money deposited in the RRSP must be in the account for at least 90 days before being withdrawn to buy a house.
Bottom Line: A couple buying a home can leverage up their down payment for a home by contributing $50,000 to their RRSPs, generate a tax return of up to $20,000. Buy the home with a $70,000 down payment after waiting the 90 days before withdrawing from the RRSP and for the tax return to arrive.