Way back when, I had talked about how one can use the RRSP for the Home Buyers Plan. Having bought my first home recently, I found the home buyers plan information on the Canada Revenue Agency website a bit difficult to understand (must be all that government lingo), so I thought I would simplify it in easy to understand terms and spell it out step by step on how take advantage of the HBP.
First off, in case you haven’t heard of the Home Buyers Plan, I’ll try to explain it.
It’s where a first time home buyer (you and whoever you buy the home with) can each withdraw up to $25,000 from your RRSP tax-free. The caveat is that you have to repay it within 15 years, following the second year after the home is bought.
e.g. if you buy the home in 2010, you will have to start repaying the Home Buyers Plan withdrawal in 2012.