Canadians----RRSPs, first time homebuyer's plan

[sanguine_speed]

I need to find a good personal finance book for Canadians because of course we have different tax laws and regulations about investments.

Do US retirement investments get invested pre-tax like an RRSP?

We are considering specifically putting money into an RRSP *RIGHT NOW* so that in 90 days we can use it for our house downpayment. Is there something similar in place for those in the US? Basically, if we put our money into an RRSP now, that money will be a massive tax deduction for us for 2007 and we will get a large tax return (which we can add to the downpayment). That money can be withdrawn from the RRSP tax-free and used as a downpayment on a house. It must be repaid within 15 years to avoid penalty.

Aside from the HBP, I'm not sure about investing in RRSPs versus paying down other debt. There is a huge incentive to start saving when you consider that DP is paying 37% tax at the margin and that money would be invested before tax. That would be tax-free savings...compounded...I really have to do some reading on this.

[organic-momma]

I'm not aware of any good books specifically for Canadians, but I would suggest sitting down with a financial advisor to see what they have to say. I found it all a little confusing and it was nice to have somebody look at our situation and tell us what would work best for us.

[CarrieMF]

We paid off our HBP last year. It took us 9 years, though some years we paid off the minimum instead of more than that.

Are you taking out a loan to get the RRSP's or do you have the $ sitting there already?

Your income tax return in future years will be reduced by the amount of HBP you are repaying each year.

You can take out up to $20,000 for a HBP, keep that in mind for repaying it. That's alot of $ to pay back, especially if you didn't have it in the first place(taking out a RRSP loan)

[sanguine_speed]

Originally Posted by CarrieMF

We paid off our HBP last year. It took us 9 years, though some years we paid off the minimum instead of more than that.

Are you taking out a loan to get the RRSP's or do you have the $ sitting there already?

Your income tax return in future years will be reduced by the amount of HBP you are repaying each year.

You can take out up to $20,000 for a HBP, keep that in mind for repaying it. That's alot of $ to pay back, especially if you didn't have it in the first place(taking out a RRSP loan)

Thanks for sharing your experience. No, we are not borrowing to contribute. We've been saving for a house but hadn't put the $$ in RRSPs (in retrospect we should have, knowing we could use it for the HBP).

[allgirls]

I have done this. And basically you don't really pay anything off..you just have to put the money back into your rrsp. Pay yourself back basically.

Or not..if you don't put this money back it goes onto your income every year and then you pay tax on it.

If you have the money sitting there then do it. Just commit to putting the money back into your rrsp every year...I do a monthly contribution..I think it's $533 a year. I didn't take out much.

Mine will be done in 6 years.

and you can only do this once.

I "think" that's how it works.

[carfreemama]

We bought our house using the maximum we could borrow from our RRSPs $50,000. We don't have to start paying it back for something like 2 years after we took the money out. By that time we figured we wouldn't have daycare expenses anymore (I work 3 days per week), so that money will go to paying back our RRSP. It allowed us to get a house sooner than we thought we could afford one and when the right house came up, we nabbed it. I'm so happy we did! But that's the thing we didn't know, that there's a grace period before beginning to pay back your RRSPs.

[CarrieMF]

Yup there's a grace period before you have to start paying it back, however I"d start asap as you never know how situations will change in those 2 years.

We never made monthly payments on ours, we "paid it back" by alloting a certain amount(there is a minimum) of our annual rrsp contributions to pay it back. This is done on your tax forms & then it just reduces the amount of your refund.