Part II - Money out of RRSP for son's condo


In respect to the question and answer listed below. Is it possible for a Canadian resident to use funds from RRSP account to invest in secured 1st mortgage? Self-directed RRSP account allows mortgage investments, so why not advance the funds in a form of a mortgage?
Your comments would be appreciated.

Thank you,

david ingram replies:

Yes, they could do that but they are now caught up in CMHC rules. Dad has to pay CMHC fees and charge CMHC rates which are likley higher than the son could get a traditional mortgage at and lower than dad would like as a return on his RRSP.

I could make a better argument for dad to just cash in XX dollars, pay the tax and give the net money to his son for the down payment or take a 10% or 20% piece of the house as tenants in common. His share of the house would be taxable but only one half. When his son gets in a better poisition, he can remortgage and buy dad out or just leave dad there for a while. If the s9on happens to end up in a divorce, that part fo the house would not be a family asset and would stay in the family.

What this person needs is a FREE written financial plan with all the parameters involved. He or she can get that by attending one of Fred Snyder's seminars.

Every Thursday Evening, Fred Snyder of Dundee Wealth Management conducts one of 17 different financial seminars in the boardroom of his office

Time: 7:00 to 9:30 PM
Date: Every Thursday evening
Place 1764 West Seventh
Vancouver (corner of Burrard)
Phone (604) 731-8900 to register

Original Question
My question is: Canadian-specific

QUESTION: I would like to assist my son buy his first property, condo, or
single family home. How is the best way to do this without triggering
income tax if the money I propose to use for this would need to come out of
my RRSP? Can monies loaned to a son or daughter for the purpose of real
estate as a principal residence considered immune from tax?

david ingram replies;

Any money taken out of an RRSP is taxable at the top of your tax rate
"UNLESS" it is taken out to buy your first home or home for a disabled
relative. If your son is not disabled, you can only withdraw money that is
taxable.

You can read more about a Home Buyer's Plan withdrawal at:
http://www.cra-arc.gc.ca/tax/individuals/topics/rrsp/withdrawals/hbp/menu-e.
html

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