Personal Finance

Rsp loan and home buyers plan

  • Last Updated:
  • Jan 1st, 2020 8:17 am
[OP]
Member
Jan 28, 2019
315 posts
173 upvotes

Rsp loan and home buyers plan

Hello,
Is it possible to withdraw money under the home buyers plan from an rsp if the rsp loan is not fully paid yet?
Thank you
14 replies
Newbie
Feb 4, 2014
60 posts
42 upvotes
Montréal
No worries about the loan, however the funds must be in your RRSP for a minimum of 90 days before you can withdraw under the HBP
[OP]
Member
Jan 28, 2019
315 posts
173 upvotes
yasben wrote: No worries about the loan, however the funds must be in your RRSP for a minimum of 90 days before you can withdraw under the HBP

Thank you
So basically you could borrow the full 35k, withdraw the money after 3 month, use part of it as a house downpayment and the rest to pay off debt?
Deal Expert
User avatar
Jan 27, 2004
44541 posts
7635 upvotes
T.O. Lotto Captain
Sternchen30890 wrote: Thank you
So basically you could borrow the full 35k, withdraw the money after 3 month, use part of it as a house downpayment and the rest to pay off debt?
Yeah ! Exactly. As long as its been within the rsp long enough.

The rsp loan is like an instalment loan... so that might effect your tdsr.
Sr. Member
User avatar
Jun 6, 2009
855 posts
298 upvotes
Montréal
I also have questions regarding the HBP.

If I understand correctly, you can withdraw the RRSP funds up until 30 days after possession, which is the day of the signing of the deed of sale before the notary.

Also, you can refund the RRSP funds in a different account.

Confirmation regarding these two points would be appreciated.
Deal Addict
Jun 24, 2015
4520 posts
1325 upvotes
Woodbridge, ON
no idea sorry. but i did borrow from rsp for hbp, but i never had money experts in my family and i had to do my own homework if i had to do it again, i would just do a rrsp withdraw instead and take the tax hit, at the time i borrowed it my income was low enough the tax would be minuscule. but ya to each his own
Hi
Deal Fanatic
Apr 5, 2016
5011 posts
3552 upvotes
Calgary/Vancouver
You may want to double check your bank. When you do a RSP loan, they may put a hold on your RRSP funds until the loan is paid off.
Current Fido and Rogers customer.
Ex Koodo customer.
Deal Addict
Aug 16, 2005
2638 posts
772 upvotes
North York
epiphano wrote: Also, you can refund the RRSP funds in a different account.
I can confirm you can put the money back into a different RRSP account. All that matters is that you get your contribution receipt and you fill out Part B of Schedule 7 form when you file your taxes. Remember 2 years after you draw from your RRSP for HBP you need to start repayment or else it gets added to your income for that taxation year. You can check your last notice of assessment on the bottom there is a section called Buyer's Plan Statement and a line that will say Minimum required repayment for 2019. If you are planning to make your regular RRSP contribution you will need to factor this repayment in.
Deal Fanatic
Apr 5, 2016
5011 posts
3552 upvotes
Calgary/Vancouver
UrbanPoet wrote: Which is illegal to do actually.
Registered investments can’t be used as security for loans.
Where does it actually say rrsp can't be used as collateral?
Current Fido and Rogers customer.
Ex Koodo customer.
Deal Expert
User avatar
Jan 27, 2004
44541 posts
7635 upvotes
T.O. Lotto Captain
bomber17 wrote: Where does it actually say rrsp can't be used as collateral?
https://www.cadesky.com/tt-10-02/

“Some taxpayers have pledged their RRSPs as collateral or security for a loan, perhaps not realizing the tax consequences.

While doing this may allow an individual to obtain funds without withdrawing investments from their RRSP, the pledging of the RRSP (or of any investment within the RRSP) will result in the full value of the pledged asset or assets being included in the taxpayer’s income for the year.”

I doubt they’re officially using the rsp assets as collateral and triggering tax implications.
But rather they use the rsp assets to mitigate the loan application.
So youre right. Not against the rules per se. But its disadvantageous in most cases due to tax implications.

But I do know of F.I. Putting holds on rsp’s. But they remove them upon request.
[OP]
Member
Jan 28, 2019
315 posts
173 upvotes
UrbanPoet wrote: Yeah ! Exactly. As long as its been within the rsp long enough.

The rsp loan is like an instalment loan... so that might effect your tdsr.
another question: Lets say I have 10000 for an rsp not now but in May (so too late to claim for my 2019 taxes.
Could I contribute the 10K in May, withdraw it under the HBP after 90 days and still claim the 10K for my 2020 taxes, even though I withdrew in 2019?
does the question make sense?
thank you
Deal Addict
User avatar
Dec 24, 2007
1448 posts
1655 upvotes
BC
Sternchen30890 wrote: another question: Lets say I have 10000 for an rsp not now but in May (so too late to claim for my 2019 taxes.
Could I contribute the 10K in May, withdraw it under the HBP after 90 days and still claim the 10K for my 2020 taxes, even though I withdrew in 2019?
Do you really meant to say "2020"... yes, you can claim the 2020 contribution for 2020 taxes, as technically the money is now in your RRSP and being loaned out by the RRSP.
[OP]
Member
Jan 28, 2019
315 posts
173 upvotes
WetCoastGuy wrote: Do you really meant to say "2020"... yes, you can claim the 2020 contribution for 2020 taxes, as technically the money is now in your RRSP and being loaned out by the RRSP.
yes I meant 2020. Contribute in may 2020, withdrawing in august 2020. It can still be claimed on my 2020 tax return even though it was taken out in 2020?
Deal Fanatic
Nov 24, 2013
6197 posts
2950 upvotes
Kingston, ON
Sternchen30890 wrote: yes I meant 2020. Contribute in may 2020, withdrawing in august 2020. It can still be claimed on my 2020 tax return even though it was taken out in 2020?
Yes.

If you make a contribution in (the remainder of) 2020, you report that contribution on your 2020 return.
If you make a withdrawal in 2020, whether that’s HBP/LLP or as taxable income, you report that on your 2020 return.

A contribution doesn’t cease to be a contribution just because you withdrew it 91 days later.

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