Withdrawing RRSP For Home Buying

by Maree
(Ontario)

I am 69 years old and wish to withdraw my RRSP to make a purchase of a home. Will I be penalized for making the withdrawal before I am 71 years of age and how will paying back be applied to me if I withdraw all of it?

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Mar 26, 2013
RE: withdrawing rrsp for home buying
by: Tom Karadza

Thanks for the question!

If you withdraw from an RRSP there is a "withholding" tax that is automatically applied and withheld from your RRSP funds. Anything $5,000 or less is taxed at 10% so you only get $4,500 and the rest is sent on your behalf to the government. And the withholding rates go up the more you take out. But you can make multiple withdrawls of $5K at the 10% rate. There are first time home buyer programs that you may qualify for that make you exempt from this as well.

If you do qualify for a tax-exempt first time home buyer program the government uses a certain percentage that you must pay back each year over a certain amount of years.

So best to chat with a good accountant to be sure. We're not accountants or tax specialists but that's the answer you'll likely here.


Tom.

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