How to use RRSP Contribution to help cover Closing Costs.
Most first-time home buyers know $35,000 in their RRSPs can be withdrawn tax-free for use towards the purchase of their first home. What they may not know is the funds must be held in their RRSP for at least 90-days.
The minimum 90-day rule creates an opportunity for individuals who may have their savings in other accounts and have not utilized their RRSP.
In these cases, it may make sense to transfer money from their savings accounts (TFSA, Stocks, High Interest Savings) into their RRSP account to lower their overall income for the year and collect a tax refund.
For example: A client with $80,000/yr 2020 income contributing $20k into their RRSP will receive a tax-refund of almost $5,500!
Those first-time home buyers looking to take advantage of the tax refund should consider maximizing their RRSPs by the contribution deadline of March 1st to get the benefits of lowering their 2020 taxes.
For more information on whether this strategy is available for you please contact your personal financial advisor or myself @ 778-215-4121.