My question is: Canadian-specific QUESTION: My question concerns paying back an RSP taken out through Home Buyer's Plan: So how does one go about that? Do you have to get a RSP account and pay it back that way (I don't currently have an RRSP)? Or can I pay it back the way I pay my cable bill every month? Any advice would be greatly appreciated. ------------------------------------------------ david ingram replies: The Home buyer's plan is a "LOAN" from your RRSP to you. You have fifteen years to pay it back in equal payments of 1/15th of the borrowed amount per year. That means that if you borrowed $15,000, you would pay back $1,000 per year to your RRSP. If you borrowed $7,500,00, you would pay back $500.00 per year. You can make your repayments to "any" RSP at any financial institution. If you were supposed to pay back $1,500 and only paid back $1,000.00, the $500.00 shortfall will be added to your income on line 130 of the return. If you forget to do it, the CCRA will add it in for you. You can, if you want, pay it all (or any extrra part) back this year. This does not make sense though because you do not get a tax deduction for the excess you pay back. The amount in the RRSP will earn exactly the same amount whether you have paid back the loan or bought new. Therefore, make sure that you only pay back the minimum and use any extra for new deposits which are deductible. I heard a CKNW guest suggest that it was a good idea to pay it back sooner but as I said above, that is not a good idea "UNLESS" you have already puit your maximum current RRSP deduction in and still have some money left over. If that situation will happen every year, by all means, pay it back early and get it working for you in a tax deferred manner. But do not pay back any extra amounts until yiou have used up all your current RRSP room. Any bank, trust company, credit union, life insurance representative or mutual fund person can handle your RRSP. If you have not got a personal advisor, you might try George Hatton, CA at 604-913-9133. George has the added advantage of being an RRSP specialist AND a superior tax consultant. He is very good at dealing with US citizens living in Canada and the reporting requirements they have to deal with for their Canadian accounts. David Ingram of the CEN-TA Group US / Canada / Mexico tax and working Visa Specialists 108-100 Park Royal South West Vancouver, BC, CANADA, V7T 1A2 (604) 913-9133 - Fax 913-9123 [email protected] www.centa.com www.david-ingram.com
