RRSP Homebuyer's Plan Payback -

This is an example of where one of  the old consultants made a
mistake  before I started the present business in February 2005.
I don't know if you remember my emails to you re: this identical
issue about 8 months ago but here is a quick overview that might
the people who sent in the "RRSP - Home buyers" question.
- We were a clients of Centa for about 8 years. D'Arcy did our
Canadian and U.S. taxes.
- I did a $20,000 RRSP 1st time home buyer loan in 1997
- Sold the house in 1998 and moved to Kauai, Hawaii (weren't sure
long we would stay in the U.S.)
- Expected to continue to pay the 1/15th payments back into my
- Rev Canada applied the balance of the loan as income. Claimed
rules say if you sell the house and leave the the country it's
you have no choice in paying it back
- Spent 7 years with D'Arcy trying to fight and find a way to pay
back my RRSP
- I emailed you 8 months ago and you said you had no idea why
ever tried or indicated there was anyway to get the money back
the RRSP and avoid the income tax. You told me to just pay Rev
- So option #2 they asked you about doesn't exist right?
- If they want to get the $20k back in the RRSP and keep it as a
egg they need to repay the loan before they sell the house or
will be paying the tax correct?
david ingram replies:
You are correct, Option number 2 does not exist. (the question
and answer is reproduced below).
However, you do not need to sell the house to have to pay it
back. Even if you kept the house and rented it out,  the Home
Buyer's Loan  should be paid back within 60 days of your leaving
the country OR it is added to the taxable income in the year that
you left.
That is why I said that if they left in January, the payback
would be at 25% because the person would not have much other
But, that it would be in the 40% range if they left at the end of
the year because it would be added to the top of their other
income for the year..
By the way, do not reply to a CENTAPEDE.  I never look at the
replies because it gets some 700 spam hits a day.  Spotted this
completely by accident.  Send anything to  taxman at centa.com which
gets 200 spam hits a day but is manageable.  Spotted this
completely by accident because it was the last one being deleted.
Subject: RRSP Home Buyers' Plan
> Hi David,
> We have a quick question for you regarding a loan we took out
> 2001 from our RRSP towards a Home Buyers' Plan for about
> We are planning to relocate to the States in the next couple of
> years.  We have some options below and was wondering which
would be
> the best financial choice:
> 1)  Is it worthwhile to repay back the entire 20,000 into our
> knowing we are going to relocate to the States in the next
> of years?
> 2)  Should we continue to repay back 1/15th of it yearly which
> would then mean that we would have to do dual income tax return
> at least 15 years?
> 3)  Claim the entire amount as income for the year we leave
> and pay the interest on it?
> Thanks so much for your much needed help!
> --------------------------------------------------
> david ingram replies;
> If you left on Jan 15th and had little income, paying tax on
> money would be at about a 23% tax rate.
> If you left on Dec 1 and had a year's income to report already,
> paying tax on the money would be likely be 30 to 44 % depending
> upon the rest of your income.
> If you were leaving at the end of the year, paying it back at a
> tax bracket would be wise, because the next year, after you
> a non-resident, you could withdraw the RRSP at a guaranteed 25%
> bracket.
> -----------

David Ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa
US / Canada Real Estate Specialists
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Disclaimer:  This question has been answered without detailed
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