Are you a first-time homebuyer looking to buy this spring or summer? Then it’s time to maximize your RRSP contributions to help build your downpayment!
Usually, homebuyers struggle with finding the money for a downpayment, especially first-time buyers. For example, if you’re looking to buy a home within the $300,000 range, you’ll need a minimum of $15,000 (5%) downpayment. You’ll also need an additional $3,000 for closing costs (home inspections, legal fees, etc.)
However, there is a great program available for first-time homebuyers to help build or top off a downpayment beyond just savings: The Homebuyer’s Plan.
Through this program, first-time homebuyers can access up to $35,000 of their RRSPs without facing any holding tax. Additionally, you have up to 15 years to recontribute those withdrawn RRSPs. AND, if you’re buying with your partner who is also a first-time homebuyer, you can withdraw up to $70,000!
Two Things to Maximize Your 2022 Tax Refund and Boost RRSP Contributions
If you’re looking to buy a home in the spring or summer, these are the two things I recommend to maximize your tax refund by topping up your 2021 RRSP contributions. Remember, the deadline for RRSP contributions for the 2022 tax year is March 1!
Do you have extra money in a TFSA or Savings Account? Roll those funds into your RRSP and use that RRSP contribution on your taxes.
Looking into getting an RRSP Loan? It may be beneficial to get an RRSP loan to maximize your contributions. An RRSP loan lets you borrow up to this year’s RRSP contribution limit (depending on your lender). The idea is that you are borrowing to invest, topping up your RRSP contributions and increasing your tax return.
Any contributions to an RRSP must be held in an RRSP account for 90 days before they can be withdrawn. If you plan to use these RRSPs for a downpayment, have your bank put these in an RRSP cash holding account and not in a locked product.
Determining your RRSP contributions to maximize your income tax refund can be tricky. I recommend using an online tool or sitting down with your accountant to figure this out. If you don’t have an accountant, I would be happy to provide a few recommendations!
If you are a first-time homebuyer and wondering how best to maximize your RRSPs to use as a downpayment, let’s explore those options to get you into your first home!
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