Would you like to buy a new home? Would you like the government to help you pay for it? You can save impressive amounts of money if you know this 100% legal maneuver with your RRSP. Let’s start with an example scenario:
- Your annual average income is $120,000.
- You paid $32,500 in income taxes on that income.
- You have saved $35,000 to date in a TFSA.
This opens up $21,600 in RRSP contribution room for you by 2021. If you want to buy a home later in 2021, and if you’re planning to save an additional $35,000 towards a downpayment, you can make use of your remaining RRSP contribution room to help you along the way.
What I would want to do from here is to take $25,000 from your TFSA and move it to an RRSP. Why? Because we want to take advantage of the tax deferral abilities that the RRSP account offers.
Making this deposit in the first 60 days of 2021 allows you to apply the tax deferral to your 2020 income. Then, once we file your income tax return, you will receive a tax refund of $11,000 because of that RRSP deposit.
Then, you can now go ahead and add the $11,000 into your TFSA for safekeeping. It’ll just keep on growing.
When you purchase your home later on in the year, we’ll help you apply for the Home Buyers Plan. The original $25,000 will now be transferred to your new home as a deposit.
The concept is simple, and will help you take advantage of two-government run programs to get your new house paid down faster. $11,000 faster!
This trick won't be available forever - book your appointment here to see how much you can save.