Looking to learn

[MikeMcCrae]

As it turns out the prohibition on lending RRSP money to yourself is no longer in place. Mortgages can now be done for your own properties. (this has been the case for a while now but I just found out) I have only found one trust company that is doing these loans but they have too many restrictions and they don`t do it on rentals. Does any one know of other companies out there that do these mortgages with out all the restrictions. I am not talking about the arms length mortgages at Olympia but mortgages to your self or your kids. Thanks for your help .

 

[GarthChapman]

Hi Mike,

I have not check on this in quite a while so I am not aware of which Trustees allow this in their internal rules. You should check with all the Financial Institutions that will act as Trustee for your self-directed RRSP account. Googling the phrase `non-arms length RRSP mortgages` and `self-directed RRSP accounts for non-arm`s length mortgages` will be a good start in finding out which Trustees do this. For example I found that search quickly told me that Canadian Western Trust does offer this: http://www.cwt.ca/iris/mortgage_broker/default.htm

One thing I remember clearly from my research way back was that CRA required that ALL the mortgages on the property would be required to be insured (CMHC/Genworth) in order to allow the non-arms length mortgage to be registered. That could be expensive if you are contemplating a smaller 2nd mortgage behind an existing conventional non-insured mortgage.

If I remember correctly in Alberta your locked-in RRSP can be used for a non-arm`s length mortgage, but in some other provinces it cannot.

Find Genworth`s rules on this here http://www.genworth.ca/content/genworth/ca...ected_RRSP.html


Non-arm`s length parties are defined as: Yourself, brother, sister, parents, spouse (either common law or by marriage), your own children (including adopted). For a detailed description of CRA’s definition of ‘arms length’, please refer to interpretation bulletin # IT-419R2 at CRA`s website.

You might want to check into what Greg Habstritt put together on the subject of RRSP lending a few months ago in his RRSP Secrets program here http://www.rrspsecrets.com/blog/

Hope that helps a bit,

 

[MikeMcCrae]

Thanks Garth, yes Canadian Western does them and yes they do have to be insured and not on rentals but there must be other companies doing them with out all the restrictions. The way I read this so far is it has a very limited usefulness. Maybe that is why no one has heard of it. LOL

 

[GarthChapman]

Mike, you could also connect with Valden Palm, aka Mr RRSP. He is most certainly in the know