Posts Tagged rrsp
How to use your RRSPs to Purchase your First Home
Posted by Top Home Loans in Investing, Mortgage Advice, Real Estate on June 20, 2009
What is the Home Buyer’s Plan?
The home buyer’s plan allows for each individual that is going on the title of the property to withdrawal up to $25,000 from their RRSPs to go towards the down payment on the new purchase. This means that if 2 people are going on the title of the property, then you can withdrawal up to $50,000, $25,000 per person, to go towards the down payment on the new purchase.
The withdrawals for this program are not considered as income in the year that this has been taken advantage of.
What are the Requirements?
When purchasing a home, you must either be a first time home buyer, or have not owned a home for a qualified period of time. The withdrawal for the down payment on the property must close within the same calender year.
The money in the RRSP must have been in the RRSP for a minimum of 90 days. You can withdrawal the money all at once or for a series of multiple withdrawals.
Do I have to repay the money back to my RRSP
Yes, you will have up to 15 years to repay the money to your RRSP. You are required to start repaying in the second year following the year you made the withdrawal from the RRSP. You will be required to repay 1/15 of the amount you withdrew annually until the amount is repaid. There is no tax liability if you only repay the minimum back to your RRSP.
Usually, your income levels will increase over the years, so it would be beneficial for you to pay the money back faster. This is because as your income level increases, then it is more advantageous for you to take advantage of RRSPs.
Until the money is repaid, then you cannot put money into your RRSPs to reduce your taxes at tax time.
This program is a great way to get a down payment on a new purchase; however, if you frequently put money into your RRSPs to reduce your taxes, then you will have to be aware that you will not be able to take advantage of RRSPs until the money you had withdrawan is paid off.
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The Best Tax Tips for 2009; The Best Ways to Reduce your Taxes
Posted by Top Home Loans in General Banking, Investing, Retirement Planning on April 18, 2009
With the tax season coming to an end in just over a week. If you have not filed your taxes by now, then you are running out of time quickly. The following list is all the activities that you should complete this year in order to reduce your tax burden as much as possible:
- Maximize on your RRSPs – You can either contribute 18% of your annual income or $21,000. By setting up a bi-weekly contribution plan, then this will confirm that you are maximizing on your RRSP contributions annually.
- Setup a Spousal RRSP – If your significant other is not maximizing on their RRSPs, then by setting up a spousal RRSP you can take advantage of this additional contribution room.
- Open a Tax Free Savings Account – If you have any non-RRSP investment dollars, then the best place to invest that money is into a TFSA. These accounts cause the interest earned to be tax-free, and you can deposit and withdrawl funds into this account whenever you like; however, you can add $5000 to this account per year.
- Invest in Dividend Investments – With capital gains on investments, they are subject to capital gains taxes. When reviewing your portfolio, it is wise to select companie that pay higher dividends over companies where you will be achieving higher taxable gains on the investment. Keep this in mind when choosing equities.
- Open RESPs – You can open a Retirement Education Savings Plan for each of your children. To take advantage of the full amount invested in these accounts, then make sure that you deposit $2500 per child for the full $500 grant. You may be able to catch up if you had missed investing in previous years.
- Pension Splitting – If you are receiving pension income, then it may b in your best interests to investigate ways to share income to lower your tax brackets. Try to even out the incomes between both spouses as much as possible.
- Income Splitting – If one spouse has a much higher income then another spouse, then it may be a good idea for the higher income earner to share income with the lower income earning spouse. This will allow the income shared to be at a lower tax bracket.
- Plan to not receive a Tax Refund – B completing a CRA Form T1213, this will allow you to reduce the tax that is taken off your paystubs each week. With the reduction in taxes paid, then you will not receive a tax return. This will allow you to get the taxes owed to you prior to tax time.
- Registered Disability Savings Plan – If someone that you know is disabled, then you may be able to take advantage of this form of an account to save up to $200,000 for that individual.
- Donate “In Kind” to Charity – When considering donating to charity, consider donating appreciated equities. This will avoid any capital gains that you have received on your investment, and allow you to give more money to charity.
Take advantage of these tax tips annually, and you will see a significant decline in the amount of money annually that you will have to pay towards your taxes.
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Do you Deserve to be Rich?
Posted by Top Home Loans in Investing on October 18, 2008
Almost everyone wants and desires to be rich, but how often do people take the necessary steps to become rich? What sacrifices are you willing to make to have the opportunity to become rich in your life, and what actions are you taking that is detrimental to making you rich?
Do you Need a New Car?
The minute you find out that the bank will lend you the money to buy a brand new vehicle, you will do it, because it doesn’t matter you deserve it, or if you see something you want, then you buy it without worrying about the consequences. Many of us live beyond our means and realize the financial repercussions later in life. For example, if a new car costs $30,000, and a used car of the same make and model that is a few years old costs, $18,000, then by taking the difference of the funds and investing it, you could have enough money from the investment to buy another car for free. That is correct, I said free. This is just one of the many benefits of compounding returns.
To review the amount of money you can save by simple spending reductions is simple. Let’s say your net monthly income is approximately $50,000. If you can save the 15% of your income, then you will immediately earn a return on your investment of 31% because of the taxable benefits if you put the money into a 401k or an RRSP. If you continue this pattern for 20 years and achieve a good rate of return on your investments, then you could have well over two million dollars.
So, why are you not taking advantage of this savings opportunity?
If you can’t or won’t put in the time to do this, then do you deserve to be rich?
Run your Life like a Business
The first thing you need to learn when it comes to money is to ask yourself two fundamental questions before ever making any purchases. These include: “Do I really need this?”, if the answer is yes, then ask yourself “Can I get the same thing for a lower price?”.
These two questions, if used effectively and honestly, will save you a ton of money and will in turn make you rich. Not only that, but it will also make you feel empowered over your finances. It will protect you in times of financial strain, and it will prevent you from impulse shopping on big and little purchases. When reviewing your monthly finances ensure that your spending is not consuming more of the money then what you are earning. If you are spending less, then make sure to make the necessary adjustments to reduce spending. Keep up to date with your finances. You never want to be at the point where you fear to look at your bank balance. Learn these strategies early in life, and make habits of them so that these practices will come naturally.
If you can’t or won’t put in the time to do this, then do you deserve to be rich?
Fear in Investing
Many people are developing a fear of the unknown. They hear in the news about most investors losing there shirts when the market turns ugly. It is a fact that during the most recent market downturn that a lot of people lost a lot of money; however, many people are making money off the whole financial crisis. These people did not make money by sitting on the sidelines and investing with a financial analyst. They had invested the time and energy learning the system, learning the rules, and learning what to do and when to do it. Even if you fail a few times before getting serious and lose some money, it is extremely effective to learn the system before you have to invest a large sum of money. If you want to be an effective trader, then you have to be able to commit yourself to be able to read at least one hour of news a day, review your investments, and learn effective ways to use the system. You don’t have to have access to a computer during trading hours (9:30-4:00PM Eastern); however, that is an added bonus.
If you can’t or won’t put in the time to do this, then do you deserve to be rich?
Money is a Measure of your Success
The richest, most successful don’t think of money the same way everyone thinks about money. Instead, they think of it as a way to measure success in life. It is also a game to hoard the most amount of money as possible and view a dollar amount as not that, but as a score competing against everyone else. They will put in the effort to maintain that they have the highest score possible and an extremely high success rating; however, until you realize that money is not about what it can buy you, instead it is about how others view you.
Do you think that people will view you more positively if you have designer clothes or thousands of dollars in your bank account?
DO you think that people will view you more positively if you have a flashy car or an amazing investment strategy?
It is easy to say that you want to be rich, or have a desire to gain wealth; however, how many us actually have a plan to do so, and if we have a plan, how many of us are taking action on that plan. Instead of thinking that one day you will make it big and become rich, it is much more effective to take the things that you have and make yourself rich out of what you have, instead of hoping to win the lottery or becoming famous.