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Home Buyers Plan - Question

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smyth

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I have a question regarding the home buyers plan in conjunction with a new condo purchase. We purchased a couple years ago and expect to move in December this year, at this time paying interim occupancy fees. We expect to take possession by June 2010 in which the building should be registered around this time. If I have read the HBP rules correctly, we should withdrawal RRSPs before October this year, am I correct? This would give us until October of 2010 to have taken possession of the suite.

Thanks for your help!
 
smyth said:
I have a question regarding the home buyers plan in conjunction with a new condo purchase. We purchased a couple years ago and expect to move in December this year, at this time paying interim occupancy fees. We expect to take possession by June 2010 in which the building should be registered around this time. If I have read the HBP rules correctly, we should withdrawal RRSPs before October this year, am I correct? This would give us until October of 2010 to have taken possession of the suite.

Thanks for your help!
Click to expand...

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html?=slnk

I have pasted a link to Canada Revenue Agency's web page re: Home Buyers Plan.
 
Yes, I have read this link but wanted to clear it up as it is written in a way that I find confusing.
 
smyth said:
Yes, I have read this link but wanted to clear it up as it is written in a way that I find confusing.
Click to expand...

My interpretation is that if you withdraw money in 2010, then, you have till October 2011 to buy a property. Please read page 5 of the link given.
 
Ok, but when does it count as 'buying' - is that considered when the building becomes registered with the city? I have bought pre-construction, that is why I am confused on which date it means when it says buy the property.
 
smyth said:
Ok, but when does it count as 'buying' - is that considered when the building becomes registered with the city? I have bought pre-construction, that is why I am confused on which date it means when it says buy the property.
Click to expand...

I am going to give you the answer to your question as long as it is clearly understood that I am not, in any way, rendering any professional advice.

To withdraw funds from RRSP, you will have to fill form T 1036. On that form, you have to specify the property you intend to purchase. As stated in an earlier post, you have till October 1 of the following year to acquire the property. This is called "completion" date.Of course, you will not acquire a property till such time title has been trasnferred to you.

If you fill up form T1036 and withdraw funds from RRSP in 2010, you have till October 1, 2011 to get title transferred to you.

When you signed the purchase agreement, you agreed to purchase a specified property for a specified price when it is ready to be transferred to you. There is no reference no where in various documents to the date of signing of purchase agreement. Only requirement is to acquire -- that is, get the title transferred -- within the time limits specified.

If you need further clarifications, then, I would suggest you call Canada Revenue Agency at -1-800-959-8281.
 
Last edited:
Actually I had spoken to them on exactly the same topic and they told me that the purchase = the time when you sign the agreement to purchase (even though at a pre-construction stage).

So your signing of the agreement has to be by the October of the following year.

Hope I didn't make the situation even more confusing for you!
 
I had the same conversation with someone at CRA. It's pretty vague overall, but they had informed me that any withdrawal will only be tax free if it is made within 12 months from the builders estimated completion date (irregardless of occupany/registration) indicated on the contract. So if you signed the POAS today, and the the completion date of your condo (listed on contract) is September of 2011, you would have to wait till September 2010 before the withdrawal. Hope this helps.
 
I'm not sure I have the 'right' answer to your question but perhaps my experience withdrawing from the HBP will give you some insight..

I purchased my unit in Jan 2006 and took occupancy at the end of Dec 2009 followed by final closing/possession on May 12, 2010.

I withdraw the maximum amount of the HBP in August/September of 2009. According to my financial rep (where I was holding my RRSP) the only condition was that I have title to my unit within 1 year of my withdrawal.. so by August/September 2010.

I didn't need to file any forms or anything.. I just had to come to the bank and show my agreement of purchase and sale and a letter with the 'expected occupancy/closing dates'. Then, when I had to file my taxes I had to specify somewhere (sorry can't remember which form) that I withdrew from the HBP.

Anyway, you probably already know this, but any amount you put into your RRSP needs sit in it for 90 days before it can be withdrawn under the HBP.
 
This is an extremely ignorant question: but what is the whole pt of taking $ from RRSP to purchase a home?
 
elyko19 said:
I had the same conversation with someone at CRA. It's pretty vague overall, but they had informed me that any withdrawal will only be tax free if it is made within 12 months from the builders estimated completion date (irregardless of occupany/registration) indicated on the contract. So if you signed the POAS today, and the the completion date of your condo (listed on contract) is September of 2011, you would have to wait till September 2010 before the withdrawal. Hope this helps.
Click to expand...

If I remember correctly what they told me was that I have to pay the amount (which I withdraw from RRSP) as a deposit to the builder by the October the following year, regardless of when the actual occupancy/closing is. But I agree that the information available is not clear or is not being interpretted consistently.
 
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