The Canadian government announced an increase in the maximum amount that first-time homebuyers can withdraw from their Registered Retirement Savings Plan (RRSP) to buy a home. The previous limit was $35,000, and it has been raised to $60,000, effective for withdrawals made after March 19, 2019. This means that eligible first-time homebuyers can withdraw up to $60,000 from their RRSPs to put towards the purchase of a home, without having to pay tax on the withdrawal.

This increase in the withdrawal limit is intended to help Canadians, particularly young people, achieve their goal of homeownership in the face of rising housing costs.

To qualify as a first-time homebuyer, you must meet certain criteria, including not having owned a home as your principal residence in the four-year period before the withdrawal is made. The withdrawn funds must also be used to buy or build a qualifying home for yourself or a related person with a disability.

It’s important to note that the RRSP withdrawal is considered a loan and must be repaid over a period of up to 15 years, starting in the second year after the withdrawal is made. If the required repayment is not made in a given year, that amount is added to your taxable income for that year. As with any financial decision, it’s advisable to consult with a financial advisor or tax professional to understand the implications of an RRSP withdrawal and how it fits into your overall financial plan. 

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