Why you should be contributing to an RRSP in February - Centris.ca
January 28, 2016

Why you should be contributing to an RRSP in February

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Are you considering buying your first home soon? Did you know that it can be very beneficial to make an RRSP contribution by the end of February?

In fact, if someone deposits $25,000 into their RRSP by the end of February, they will be able to withdraw this amount 90 days later without penalty, through the Home Buyers’ Plan (HBP). Because interest rates are at historically low levels, it may even be advantageous to borrow this money if necessary.

As a future buyer, you should therefore have, at the end of May or early June, an amount of $25,000 that is available for a down payment on a home, as well as an additional amount of approximately $10,000, which represents the tax credit on the amount of $25,000 (based on a tax rate of 40%). If the RRSP contribution is made in March 2016, the tax credit will only be issued in May or June of 2017!

If both members of a couple contribute $25,000 to their RRSP, they will then have $70,000 available for their initial down payment on a home! As another possibility, they can use the $10,000 tax credit to repay part of their loan. They will therefore have $25,000 per person for a down payment, and a debt that has been reduced to $15,000.

That’s something to consider!

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