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cliffjw
New Member

Used rrsp as a down payment on my house. Can I withdraw more from my rrsp (pay tax on it), then use that money to put back into my rrsp to pay off the original amount?

I will be earning very little income in 2017 ($12k).  Five years ago I used 25k (tax free) from my rrsp as a down payment on my house.  I've been paying $1670/year back into my rrsp ever since.  Can I now withdraw $17k more from my rrsp (pay tax on it), then use that money to put back into my rrsp to pay off the original down payment amount I withdrew?  What time of year should I do this?  I would like to take advantage of the fact I am earning very little income this year (I don't like RRSP accounts anymore, I prefer TFSA's).

Thx


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Accepted Solutions
TurboTaxJennifer
Moderator

Used rrsp as a down payment on my house. Can I withdraw more from my rrsp (pay tax on it), then use that money to put back into my rrsp to pay off the original amount?

If you withdraw your RRSP, you're free to do with the funds as you wish of course. As you know, early withdrawals are subject to tax penalties.

By re-contributing to another RRSP with your funds, you can pay off the HBP early. Here's a link for more details: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-hom...

My best advice is to get in touch with your RRSP provider for guidance on when is the best time to do the transaction.


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1 Reply
TurboTaxJennifer
Moderator

Used rrsp as a down payment on my house. Can I withdraw more from my rrsp (pay tax on it), then use that money to put back into my rrsp to pay off the original amount?

If you withdraw your RRSP, you're free to do with the funds as you wish of course. As you know, early withdrawals are subject to tax penalties.

By re-contributing to another RRSP with your funds, you can pay off the HBP early. Here's a link for more details: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-hom...

My best advice is to get in touch with your RRSP provider for guidance on when is the best time to do the transaction.


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