Saving Taxes for First time home buyers

How can first time home buyers save taxes?

The HBP Home Buyer's Plan through the Canadian government allows first time home buyers the ability to use up to $35,000 from their RRSP to be used for the purchase of their first home.

Please seek advice from your accountant for your individual situation, but this post goes through the basics.

An RRSP (Registered Retirement Saving's Plan) is a tax savings account geared towards helping people save for retirement. It allows you to not be taxed on the money you put into the account (for the tax year you put it into the account), and it brings down your total taxable income so hopefully bringing you into a lower tax bracket for the amount of your taxable income that is taxed.  (see the video for a basic example)

The government does expect you to repay (put the money that you took from the RRSP back into the RRSP) but gives you 15 years to do so.

A big point is that the money needs to be in the RRSP account for at least 90 days before it can be taken out. Usually the closing date is what the money is taken out and paid through the lawyer. This may be the day before the possession date but it is very close to the date that you move in to your new home, so don't worry too much about the date that you put in an offer or decide to buy a home, but be concerned about the possession date when you are putting in an offer as to make sure the money in the RRSP will have been in the account for 90 days before it is taken out.

Saving Taxes and money is important. We often work as a team. Mortgage brokers have a lot more pressure to get financing for our clients for the simple fact that we are one of the largest sources of referrals for mortgage brokers and if they cannot help our clients then they will lose a lot of business.  So, if you need connections for getting a mortgage or for buying your first home definitely reach out.

Usually the first step is to go through the whole process with you, make sure you are doing the right things as you plan to buy.

Feel free to reach out and set up your Free buyers consultation.

Derek is licensed for residential, commercial, and rural real estate, plus has many years of personal and business experience to be able to understand your needs.

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