TAX-FREE RRSP WITHDRAWALS
WITHDRAWALS FROM RRSP
Normally, when funds are taken out of an RRSP, the owner of the plan must include the amount as income in the same year. Ideally, RRSP should be used for income at retirement when vast majority of people are in a lower tax-bracket. There are, however, two exceptions:
1. The Home Buyers' Plan (HBP) It allows you to withdraw up to $20,000 from an RRSP to buy or build a qualifying home
a. For yourself (as a first-time home buyer). You may still be Owning a rental property does not disqualify you from being considered a first-time home buyer. Also if you have not recently owned a home; you may qualify for HBP.
b. For a disabled relative.
For the purposes of the Home Buyers' Plan, a qualifying home is a housing unit located in Canada. This includes existing homes and those being constructed.
Single-family homes, semi-detached homes, townhouses, mobile homes, condominium units, and apartments in duplexes, triplexes, 4-plexes, or apartment buildings, all qualify.
A share in a co-operative housing corporation that entitles you to possess, and gives you an equity interest in, a housing unit located in Canada also qualifies.
However, a share that only provides you with a right to tenancy in the housing unit does not qualify.
When you withdraw funds from your RRSP under the HBP, you must repay the amounts over a specified period of up to 15 years.