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RRSP Home Buyers Plan
The recently announced federal budget has introduced
modifications to the Home Buyers Plan which allows
more flexible use of registered savings - including the
purchases of homes built for those with disabilities.
Over the past six years, nearly half a million Canadians
have used their Registered Retirement Savings Plan
(RRSP) savings for a downpayment to purchase a home
using the Home Buyers Plan. Under the modified plan,
starting in 1999, homeowners can use the plan to purchase a
more accessible home or a home for a dependent relative. In
addition, a person who has already used the plan and who
has fully repaid the RRSP will be eligible to use the plan for
a second time. Buyers can cash out up to $20,000 from their
RRSPs to use for a downpayment on a home. Couples are
allowed to draw out a maximum of $40,000, and there will
be no penalty for such withdrawal, provided the money is
repaid over a set time period.
According to the federal government, the budget change to
allow the secondary purchase of a home for a dependent
relative is a reaction to demographics. At present, one in nine
Canadians is over the age of 65 and by the year 2030 this will
rise to one in four. The aging population has accelerated the need
for more accessible homes, i.e. homes that are equipped for
persons with disabilities. It is estimated that some 50,000 homes
will have to be built or retro-fitted each year to keep pace with
demand for accessible features.
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