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How to get the government to help you save for a down payment! Part 1


Blog by Claire LeLacheur | November 10th, 2014


 

As a Vancouver Realtor and home owner, I completely understand that saving for your first down payment can be a daunting task.  That’s thousands of dollars that you need to accumulate and living in one of the most expensive cities doesn’t make saving easy.  But, did you know there is a government program that allows you to withdraw funds from your RRSP?  It’s called the home buyers’ plan (HBP).  You can withdraw from your RRSP up to $25,000 without having it be taxed as income.  As you already know, the biggest benefit of contributing to an RRSP is that you don’t pay tax on every dollar that you contribute.  So, depending on what tax bracket you’re in, you can use your RRSP as a way to save 20% FASTER (assuming a 30% tax bracket) than if you just put the same funds into a savings account.  These funds do have to be repaid back into the RRSP within a 15 year period (approx $1,667/yr) or it will be included in your income for that year.  But now that you’re in your new home, you want to savour every minute and save money from going out!  Check out part 2 of this post for the mathematical breakdown. 


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