IN THE NEWS ~ Private member's bill would increase allowable RRSP withdrawal
September 30th, 2010 - 4:00am
Private member's bill would increase allowable RRSP withdrawal
By Janaya Fuller-Evans, Burnaby Now
September 30, 2010
Burnaby-New Westminster MP Peter Julian has tabled a private member's bill to adjust the amount home buyers could withdraw from their RRSPs for the purchase.
Bill C-567 would make it possible for home buyers to adjust the amount for inflation, according to Julian's press release.
"This bill would help ensure that the ability of Canadians to purchase homes does not diminish with time and inflation," Julian said in the release. "RRSP contributions to home ownership must reflect the increased cost of housing."
The bill would amend the provision in the Income Tax Act, under the Home Buyers Plan, which currently allows home buyers to withdraw $25,000 for purchasing a home without paying taxes on the money withdrawn.
Spouses can also withdraw $25,000 for the purchase.
The Home Buyer's Plan is specifically for first home purchases, and is only a loan. Home buyers have to repay the loan within 15 years, beginning the second year after the withdrawal, or pay the income taxes on it.
Home buyers can use the program if they've previously owned a home, so long as the buyer and his or her spouse have not owned and lived in that home between Jan. 1, 2006 and 31 days before withdrawing the loan money.
Fore those who have previously participated in the Home Buyers Plan, they need to have the balance paid off before they can make another withdrawal.
The loan amount was increased in January 2009 from $20,000.
"Indexing the RRSP withdrawal limits of the Home Buyer's Plan would be an effective way to ensure the program maintains its purchasing power and continues to assist home buyers to the extent that it was originally intended," Jake Moldowan, Real Estate Board of Greater Vancouver president, said. "The Home Buyer's Plan is a helpful tool for home buyers of all demographics in our region. Our association appreciates ongoing efforts to ensure the program's long-term relevance."
B.C. has been hit hard by an increase in home prices, Julian's release stated.
"The Home Buyer's Plan Act complements other necessary policy measures that the NDP has been advocating for years to provide better access to affordable housing," he said. "We must make sure that home buyers have access to a wide variety of options to buy their homes in a safe, fair and sustainable way."
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