KA1
Senior Member
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.
Most of you are coming to the conclusions based upon what someone said to you. What someone said to you, in turn, depends upon that individual's knowledge, that in turn, might have come from what that individual was told.
With all due respect, this is the classic example of a blind leading a blind. Nobody has bothered to go to the source.
In my earlier post (# 8), I have pasted a link to CRA booklet on Home Buyer's Plan. Here, I am reproducing a few quotes from that book.
On page 6, it is stated that to withdraw funds, you must, first, have entered into a written agreement.
Page 7: you have to fill form T 1036 for each eligible withdrawal.
Page 8: this page has the most important information.
You have to buy or build the qualifying home before October 1 of the year after the year of the withdrawal. For example, if you withdrew money from your RRSP in, say, 2009, you have till October 1, 2010 to buy or built a habitable house.
And now the important point.
If you have not bought or built a house before the deadline of October 1, 2010, then, there is an extension of 1 more year -- till October 1, 2011. You have to meet one (1) of the following two(2) conditions:
(a) you have till October 1, 2011 to buy a qualifying home provided you had a written agreement to purchase a unit by October 1, 2010.
OR
(b) if your home is being built, you have given to the contractor, by October 1, 2010, an amount equal to the amount of your withdrawal towards the purchase of material or construction.
conditions in item (b) clearly applies in a situattion where a housing unit is being built specifically for you. However, it can reasonably be argued, that, when you give condo builder down payment upon signing the purchase agreement, then, you are giving builder an advance payment for the purchase of material and construction of unit.
As stated above, payment in condition (b) has to be equal to the withdrawal from RRSP.
One could, definitely, be in trouble, if the down payment to the builder was, say, $ 10,000.00 and withdrawal from RRSP was, say, $ 25,000.00
Read example 5 on page 8.
Happy reading on this easy, lazy Victoria Day.