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?

[cliffjw]

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

[TurboTaxJennifer · Accepted solution]

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.