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  • Feb 16th, 2021 1:19 pm
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[OP]
Newbie
Jun 3, 2019
52 posts
15 upvotes

Downpayment

Hello,

Preparing to pay the downpayment in the near future. We have funds in rrsp, tfsa, non-reg and my spouses business account. What order should we withdraw the funds to pay the down payment?

I was thinking rrsp, non reg then tfsa. We don't need to touch the business account cause I think this will suffice to pay the downpayment.

My rrsp has around 25k and his around 40k, I understand we bought can withdraw $35k each for first time home buyers plan. Since I've not reached $35k, I'm going to lose a bit of room from that plan. Any ideas?

Thanks in advance
12 replies
Deal Guru
Feb 9, 2009
10816 posts
9188 upvotes
well how much are you putting down?

yeah i think the order you said makes sense. and remember money out of the business account is considered a shareholder loan and needs to be paid back within two years to the corp.
Member
Jul 4, 2018
375 posts
295 upvotes
I would buy first (resale of precon preferably) and worry about how to downpay later...
I wouldn’t spend much time in thinking which order to pay...
Deal Fanatic
User avatar
Sep 14, 2006
8769 posts
1436 upvotes
Assuming you haven't maxed out your contribution limit to your RRSP, you can consider borrowing funds to deposit into your RRSP so you can maximize your $35K HBP. Keep in mind you need to keep it in the RRSP for 90 days before you can withdraw for the HBP. With interest rates being low, it's definitely an option but keep in mind the timelines and deadlines.
TEAM CANADA!!!!!!!!!!!
Deal Guru
Feb 9, 2009
10816 posts
9188 upvotes
sorry to say...65k downpayment is pointless houses already went up 100k last month alone...
[OP]
Newbie
Jun 3, 2019
52 posts
15 upvotes
Sanyo wrote: well how much are you putting down?

yeah i think the order you said makes sense. and remember money out of the business account is considered a shareholder loan and needs to be paid back within two years to the corp.
Putting down 20%. Sorry I should have mentioned, we've already bought and moving in may first week.
[OP]
Newbie
Jun 3, 2019
52 posts
15 upvotes
Lavaris1 wrote: I would buy first (resale of precon preferably) and worry about how to downpay later...
I wouldn’t spend much time in thinking which order to pay...
Sorry, I should have mentioned, we've bought already. Moving may first week.
[OP]
Newbie
Jun 3, 2019
52 posts
15 upvotes
bobbings wrote: Assuming you haven't maxed out your contribution limit to your RRSP, you can consider borrowing funds to deposit into your RRSP so you can maximize your $35K HBP. Keep in mind you need to keep it in the RRSP for 90 days before you can withdraw for the HBP. With interest rates being low, it's definitely an option but keep in mind the timelines and deadlines.
I only have $1000 room in RRSP from last year, I guess you're saying I cant contribute to that now , since we're closing may 1st week.
Sr. Member
Jan 5, 2020
743 posts
1028 upvotes
What is the reason that you don't want to use the cash in the business account? I would try to pay for the downpayment using available cash first prior to liquidating any investments.

If the business is incorporated, you can take out a shareholder loan and repay it back later. If it is not incorporated, you can just take the money out with no consequences.

After that, I will use the HBP to withdraw funds from RRSP.

Then the non registered accounts.

Then TFSA.
Deal Fanatic
User avatar
Sep 14, 2006
8769 posts
1436 upvotes
AnnCook wrote: I only have $1000 room in RRSP from last year, I guess you're saying I cant contribute to that now , since we're closing may 1st week.
If you’re closing May 1st, then the contribution question is now moot but just to close off the loop (questions), you need to put the contribution into the RRSP account for 90 days before you can withdraw it back out to pay out the HBP. If you are closing in less than 90 days, then it isn’t allowed to be deferred for tax implications later on. This is the same rule not just for HBP but RRSP contributions in general. You’ll now just be taxed your regular income amount for the extra you contributed and sat less than 90 days in the account if you choose to withdraw it back out.
TEAM CANADA!!!!!!!!!!!
[OP]
Newbie
Jun 3, 2019
52 posts
15 upvotes
Newuserid wrote: What is the reason that you don't want to use the cash in the business account? I would try to pay for the downpayment using available cash first prior to liquidating any investments.

If the business is incorporated, you can take out a shareholder loan and repay it back later. If it is not incorporated, you can just take the money out with no consequences.

After that, I will use the HBP to withdraw funds from RRSP.

Then the non registered accounts.

Then TFSA.
The business account is incorporated. I have liquidated all our funds before we bought a house. So do u still recommend using the business first if all funds in all accounts are liquidated?
Sr. Member
Jan 5, 2020
743 posts
1028 upvotes
AnnCook wrote: The business account is incorporated. I have liquidated all our funds before we bought a house. So do u still recommend using the business first if all funds in all accounts are liquidated?
Ohh okay, that changes things a lot. At this point, you just have cash sitting in different accounts so the order doesn't really matter that much. But I would proceed in the following order:

1. Fully utilize RRSP HBP withdraw.

2. Non-registered accounts. No tax implications of withdraw.

3. TfSA. Make sure to keep track of contributions and withdraws.

4. Business account last due to potential tax implications of withdrawing funds from corporation.
[OP]
Newbie
Jun 3, 2019
52 posts
15 upvotes
Newuserid wrote: Ohh okay, that changes things a lot. At this point, you just have cash sitting in different accounts so the order doesn't really matter that much. But I would proceed in the following order:

1. Fully utilize RRSP HBP withdraw.

2. Non-registered accounts. No tax implications of withdraw.

3. TfSA. Make sure to keep track of contributions and withdraws.

4. Business account last due to potential tax implications of withdrawing funds from corporation.
Thanks!! This is helpful.

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