RRSP Investment Options

November 19th,2010 | www.WorldWealthBuilders.com |

"RRSP can be utilized to its maximum benefits as per the guidelines of Canada Revenue Agency (CRA) apart from tax deferral and retirement savings. Being an educated Professional Real Estate investor would be able to get benefits many times over " says Navtaj Chandhoke, founder, World Wealth Builders, a Canadian Institute for Real Estate investors and mentoring. You need to learn and keep yourself up to date to have maximum benefit from your RRSP".

"Once you are familiar with how to put the RRSP work for you right now instead of after the age of sixty five, the rewards can be realized now and later" said Navtaj Chandhoke "Investing in yourself, your education will give you far better return than any other investment."

There are two ways to borrow from your RRSP. First is through the RRSP Home Buyers Plan, for first-time home buyers, and second is through the Lifelong Learning Plan, for educational expenses.

The Lifelong Learning Plan (LLP) allows you to withdraw amounts from RRSPs to finance training or education for you or your spouse or common-law partner. You cannot use the RRSP funds to finance your children's training or education, or the training or education of your spouse or common-law partner's children.

You can make withdrawals from more than one RRSP as long as you are the annuitant (plan owner) of each RRSP. Your RRSP issuer will not withhold tax on these amounts. Although the maximum amount that you can withdraw is $20,000, there is an annual limit of $10,000. There is no limit on the number of times you can participate in the plan over your lifetime. Starting the year after you bring your balance to zero, you can participate in the LLP again and withdraw up to $20,000 over a new qualifying period.

The Home Buyers' Plan (HBP) is a program that allows you to withdraw up to $25,000 (after January 27, 2009), from your registered retirement savings plan (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability .

You are not considered a first-time home buyer if you or your spouse or common-law partner owned a home that you occupied as your principal place of residence during the period beginning January 1 of the fourth year before the year of withdrawal and ending 31 days before your withdrawal.

You have to meet this condition at the time you withdraw an amount from your RRSPs under the HBP.

However, if you are a person with a disability, or you are buying or building a home for a related person with a disability or helping such a person buy or build a home, you do not have to meet this condition. See HBP Condition - Person with a disability.

If at the time of the withdrawal you have a spouse or common-law partner, it is possible that only one of you will be considered a first-time home buyer.

These Canada Revenue Agency programs allow you to withdraw funds without a tax penalty. If you borrow outside these programs before retirement to pay for a trip or a car, the withdrawal is considered income in the year you received the funds and you’ll pay hefty taxes.

Check with Canada Revenue Agency for full details on both of these plans.

These plans make sense for some people, but there are drawbacks. First, when you take money out of your RRSP, you lose the power of compounded interest and re-invested returns on those funds. Money grows exponentially over time and when you reduce the money in your RRSP account, you earn less interest and sacrifice potential returns.

There are other pitfalls as well, make sure to research them all and realize the primary benefits of the plans are home ownership and education weigh the pros and cons to make an informed decision.

BC First Time New Home Buyers Bonus

BC First-Time New Home Buyers' $10,000.00 Bonus Tax Free

 The BC First-Time New Home Buyers' Bonus is a one-time bonus payment worth up to $10,000 for first-time new home buyers in BC. The legislation for the BC First-Time New Home Buyers' Bonus is expected in spring 2012.

“ Finally BC first time buyers would have the opportunity to have their dream release by  owning their dream home instead of  renting it” says Navtaj Chandhoke, founder of Professional Real Estate Investors Group (PREIG) Canada” it can be difficult for lot of Canadian families to save the down payment. This program will assist lot of families in the BC”.

BC First-Time New Home Buyers' Bonus are required to have following qualifications

• Eligible claimants must be first-time homebuyers - an individual who has never previously owned a primary residence anywhere in the world;
• For couples, neither the individual nor the spouse or common law partner can have previously owned a primary residence anywhere in the world;
• The claimant must file a BC resident personal income tax return for 2011 or if the claimant moves to BC after December 31, 2011, must file a 2012 BC resident personal income tax return;
• Individuals or families who move to BC after December 31, 2012 will not be eligible.

Newly Constructed Homes and Substantially Renovated Homes

• The bonus is available in respect of new homes located in BC (i.e. newly constructed homes purchased from a builder and substantially renovated homes), on which HST is payable;
• A substantially renovated home is one where all or substantially all of the interior of a building has been removed or replaced, generally 90% or more of the home must be renovated to qualify;
• The written agreement of purchase and sale for the home must be entered into on or after February 21, 2012 and before April 1, 2013;
• Ownership or possession of the home must transfer before April 1, 2013;
• Eligible new homes include detached houses, semi-detached houses, duplexes, and townhouses, residential condominium units, mobile homes and floating homes and residential units in a cooperative housing corporation.

The BC First-Time New Home Buyers' Bonus is available in respect of owner-built homes:

• Where the written agreement of purchase and sale for the land is entered into on or after February 21, 2012 and before April 1, 2013;
• The bonus will be based on land and construction costs subject to HST;
• Construction of the home must be complete, or the home must be occupied, before April 1, 2013.

Other Criteria for BC First-Time New Home Buyers' Bonus

• The claimant must be eligible for the BC HST New Housing Rebate in order to receive the bonus;
• The claimant must intend to live in the house as a primary residence;
• No one else has claimed the bonus in respect of the home.

Bonus Calculation for BC First-Time New Home Buyers' Bonus

• The bonus is calculated as 5% of the purchase price (not including HST) of the home up to a maximum of $10,000;
• The bonus is income tested. For single individuals, the bonus will be phased out at a rate of 20 per cent of net income in excess of $150,000 and eliminated at incomes greater than $200,000. For couples, the bonus will be phased out at a rate of 10 per cent of family net income in excess of $150,000, and eliminated at family incomes greater than $250,000.

You must apply to the BC Ministry of Finance to receive the bonus. The ministry will process applications, determine eligibility, and issue the bonus payments. The bonus is not claimed when filing an income tax return.

Once available, the application form will be posted at

http://www.sbr.gov.bc.ca/individuals/income_taxes/personal_income_tax/tax_credits/fthb_bonus_about.htm