To tackle the bane of unaffordable housing prices, the federal government has introduced a novel program, which is a RRSP + TFSA combined. In this program, first time home buyers will be able to allocate up to $40K of income to this program, get a tax deduction on the $40K life RRSP (Maximum yearly contribution of $8K) and upon withdrawal of funds for house purchase, like TFSA the funds will not be taxed.
The best parts of both TFSA and RRSP are included in this rather creative program, as a savings mechanism to help young Canadians buy a house. One key point to note about this program is that it is not the RRSP home buyer’s plan. Both plans cannot be used simultaneously. Additionally, unlike in a RRSP home buyers plan where funds are borrowed from RRSP, these funds will not have to be paid back to the RRSP program.
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The information contained herein is general in nature and is based on proposals that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice or an opinion provided by Geib & Company to the reader. This material may not be applicable to, or suitable for, specific circumstances or needs and may require consideration of other factors not described herein.
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