RRSP`S for mortgage purposes

[KrustyKrabs]

Hello everyone,

I have previously participated in the home buyers plan using rrsp about 8 years ago when I was still married. That house under the HBP has been since sold, and another house purchased with my now ex-wife. I am no longer owner of that house.

My understanding of the HBP rules is that I would not be eligible to participate in HBP again for another 4 years.

If that is the case, can I get around this by doing the following:

1) Create a corporation to purchase my first investment property.

2) Direct my RRSP`s in the form of a second mortgage to that corporation for said purchase.

If this is legal and used routinely, what are the benefits/drawbacks?

Any information as to how I can use my RRSP to purchase my first (investment) property without immediate taxation would be greatly appreciated.

Glen

 

[MikeMcCrae]

Directing your RRSP money to your corporation would not pass the arms length rules. Legally you can not use your RRSP money to buy a property for your self.

 

[GarthChapman]

Glen, I think your RRSP may be able to lend to you for a purchase, but as I remember it the entire mortgaged amounts on the property would have to be insured (such as with CMHC), and of course your Trustee would have to allow such a transaction - some do and some don`t.

Valden Palm (aka Mr RRSP) should be able to answer this possibility for you. You can email him at [email protected] or go to his website at http://www.misterrrsp.com

 

[KrustyKrabs]

QUOTE (MikeMcCrae @ Mar 22 2008, 03:57 PM) Directing your RRSP money to your corporation would not pass the arms length rules. Legally you can not use your RRSP money to buy a property for your self.

Thanks Mike

 

[KrustyKrabs]

Thanks Garth,

I will check the website out....I suppose I could also go and do 2nd mortgage rrsp loan as long as there is going to be a great return on investment, however I truly wish to concentrate on owning my own investment property first.

Glen

 

[RichardCanfield]

QUOTE (KrustyKrabs @ Mar 21 2008, 05:37 AM) Hello everyone,

I have previously participated in the home buyers plan using rrsp about 8 years ago when I was still married. That house under the HBP has been since sold, and another house purchased with my now ex-wife. I am no longer owner of that house.

My understanding of the HBP rules is that I would not be eligible to participate in HBP again for another 4 years.

If that is the case, can I get around this by doing the following:

1) Create a corporation to purchase my first investment property.

2) Direct my RRSP`s in the form of a second mortgage to that corporation for said purchase.

If this is legal and used routinely, what are the benefits/drawbacks?

Any information as to how I can use my RRSP to purchase my first (investment) property without immediate taxation would be greatly appreciated.

Glen


There is a program available to get access to your RRSP`s indiretly. The net Cost is 6%. Essentially you use your Self-Directed RRSP account with your Trust company (CWT, Olympia, TD Waterhouse) and invest it with a company for a 4% Bond and based on a simple approval (650 credit score minimum) you can get an interest only loan from them at 7-10% (based on credit rating and amount of capital invested). 6% is pretty cheap if it`s interest only and you have lots of RRSP or LIRA capital available to purchase some Quality Property in Alberta.

I do not advicate this program as It isn`t one I have participated in (therefore I have no frame of reference). I am merely passing the info on so you are aware that there are other options available. If you would like to get more info on it contact me directly as I have to rummage through a file to track down the pamphlet I recieved on the program. I beleive the company is based out of BC but again this is something I would have to verify for you.

Likewise I could probrably connect you to some people who have used the program so you can ask them about thier experiance with the program. Remember it`s critical to due you due diligence and be informed so you can make calculated decisions.

Here`s to you achieving the results you are looking for,
Good luck!

 

[KrustyKrabs]

QUOTE (RichardCanfield @ Mar 22 2008, 08:43 PM) There is a program available to get access to your RRSP`s indiretly. The net Cost is 6%. Essentially you use your Self-Directed RRSP account with your Trust company (CWT, Olympia, TD Waterhouse) and invest it with a company for a 4% Bond and based on a simple approval (650 credit score minimum) you can get an interest only loan from them at 7-10% (based on credit rating and amount of capital invested). 6% is pretty cheap if it`s interest only and you have lots of RRSP or LIRA capital available to purchase some Quality Property in Alberta.

I do not advicate this program as It isn`t one I have participated in (therefore I have no frame of reference). I am merely passing the info on so you are aware that there are other options available. If you would like to get more info on it contact me directly as I have to rummage through a file to track down the pamphlet I recieved on the program. I beleive the company is based out of BC but again this is something I would have to verify for you.

Likewise I could probrably connect you to some people who have used the program so you can ask them about thier experiance with the program. Remember it`s critical to due you due diligence and be informed so you can make calculated decisions.

Here`s to you achieving the results you are looking for,
Good luck!

The first question that comes to mind is if the interest only loan is considered a second mortgage on the property, or is just an unsecured personal loan or LOC?

When it comes time to mortgage, what would have to be declared to the mortgage company, i.e. where did the down payment come from?

Thanks,

Glen