Personal Finance

HBP and undeducted RRSPs

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  • Mar 30th, 2014 8:32 pm
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Member
Dec 23, 2009
402 posts
46 upvotes

HBP and undeducted RRSPs

Simple question. I came into some money and intend on buying a house within the next year once I get back on my feet. I plan on putting my money into an RRSP so I can buy a house. However, I want to wait and deduct the contributions yet as it wouldn`t be efficient to do so as I am currently in the bottom tax bracket. Am I able to take out a home buyers plan while having undeducted RRSP contributions so I can maximize my tax benefit? Thanks
7 replies
Penalty Box
Aug 11, 2005
4175 posts
1432 upvotes
There's no point. Just put that money towards your mortgage instead.
Deal Addict
Jul 15, 2009
3654 posts
3054 upvotes
Yes, you can make an HBP withdrawal while having undeducted RRSP contributions. You can then deduct those contributions in future years. I did exactly this myself.

Just watch out for the 90 day rule: you can only do an HBP withdrawal of funds that have been in the RRSP at least 90 days.

Edit: and yes, there is "a point" to doing this, as long as you do deduct them within a few years.
Penalty Box
Aug 11, 2005
4175 posts
1432 upvotes
bubak wrote: Yes, you can make an HBP withdrawal while having undeducted RRSP contributions. You can then deduct those contributions in future years. I did exactly this myself.

Just watch out for the 90 day rule: you can only do an HBP withdrawal of funds that have been in the RRSP at least 90 days.

Edit: and yes, there is "a point" to doing this, as long as you do deduct them within a few years.

no there isn't. just put that money in when you want to deduct
Member
Dec 23, 2009
402 posts
46 upvotes
bubak wrote: Yes, you can make an HBP withdrawal while having undeducted RRSP contributions. You can then deduct those contributions in future years. I did exactly this myself.

Just watch out for the 90 day rule: you can only do an HBP withdrawal of funds that have been in the RRSP at least 90 days.

Edit: and yes, there is "a point" to doing this, as long as you do deduct them within a few years.
Absolultely. I am not too worried about the 90 day rule because I definitely won't be buying a house in that timeframe lol. I was thinking that I put the money in the RRSP, not deduct it until my marginal tax rate is much higher. Once I receive my tax refund, I will put it back towards what I took out for the HBP...at least thats the plan anyway
Deal Addict
Jul 15, 2009
3654 posts
3054 upvotes
Luckyinfil wrote: no there isn't. just put that money in when you want to deduct
That doesn't work because by then, the money is locked up in the house.

And any money that you put into the RRSP at that point is stuck in the RRSP and you can't use it towards paying down your mortgage.
Deal Addict
Jul 15, 2009
3654 posts
3054 upvotes
keano wrote: Absolultely. I am not too worried about the 90 day rule because I definitely won't be buying a house in that timeframe lol. I was thinking that I put the money in the RRSP, not deduct it until my marginal tax rate is much higher. Once I receive my tax refund, I will put it back towards what I took out for the HBP...at least thats the plan anyway
Yes, this plan should work fine.
Member
Mar 31, 2013
396 posts
84 upvotes
Toronto
The point of putting money into RRSP and using HBP without taking the deduction is that the money still grows tax free before you take it out. This assumes TFSA is maxed out already.

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