As most readers know my revulsion of Guest Posts, however, Sean Cooper is a friend of the site and has posted before.

Disclosure: This site (and I) have not been compensated for publishing this post. The opinions expressed are those of Mr. Cooper.


Buying a home is a major financial decision. If done right, it can be the single best investment of your lifetime. But the desire to purchase a home and actually buying one are two different things. Many of us would like to be homeowners, but what stops us is the down payment. Thankfully, the government will give you a little help. The RRSP Home Buyers’ Plan assists first-time homebuyers afford a home sooner.

Let’s take a look at what the Home Buyers’ Plan is and if it makes sense to pay it down sooner.

What is the Home Buyers’ Plan?

The Home Buyers’ Plan (HBP) is plan made by the government to make it easier for first-time homebuyers. Under the HBP, you can withdraw up to $35,000 from your RRSP to use for your down payment. (That’s $70,000 combined when you’re buying with another first-time homebuyer.)

The RRSP helps save up your down payment sooner because of the tax refund that you receive. Let’s go through an example to illustrate this. Let’s say your tax rate is 30% and you made a $10,000 RRSP contribution. In this instance you’d be eligible for a tax refund of $3,000 (30% X $10,000 = $3,000). That’s the equivalent of a 30% no risk return on your money. Not bad!

Also by borrowing under the HBP, you may be able to avoid paying CMHC fees thanks to your heftier down payment.

The HBP is a great program as long as you follow the rules. When you withdraw money from the HBP, you’re required to pay it back over 15 years starting in the second years since you borrowed the money. Any money you don’t pay back is included as taxable income and you lose the RRSP room forever. Ouch!

Some financial gurus are against using the HBP. They claim that you’re borrowing from your future self. While that may be true, if you’re buying in a city with high home prices like Toronto or Vancouver, the HBP may be the helping hand you need to get into the real estate market sooner rather than later. In these markets, it’s tough to turn down the guaranteed return you get with the HBP. Provided you use the HBP is a smart way and repay the money you borrow according the repayment schedule, it can be a wonderful program.

Should you Pay Down the Home Buyers’ Plan Sooner?

If you get a cash windfall, should you pay off the HBP sooner? It some cases it can make a lot of sense. As previously stated, you need to pay back any money borrowed from your RRSP from the HBP within 15 years. Using the example above, if you borrowed $10,000, you’d have to pay back $666.67 annually ($10,000 / 15 years = $666.67). But if you have the money, why not increase it to $750 annually? When you do this, you’d pay it back in only 13.33 years, almost 2 years sooner. After the HBP is fully repaid, any further money you contribute to your RRSP goes towards saving for retirement. This lets you take full advantage of the power of compound interest.

About the Author

Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. An in-demand Personal Finance Journalist, Money Coach and Speaker, his articles and blogs have been featured in publications such as the Toronto Star, Globe and Mail, Financial Post and MoneySense. Connect with Sean on LinkedInTwitterFacebook and Instagram.

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Income Tax Receipts

After posting my taxes on Sunday, I was wondering how things would go with my return. I am currently in a reassessment for the previous tax year, so what would the CRA do about this?

It did not take long, as they replied on-line with a message asking for receipts for the tax year for the exact areas where I am being reassessed for the previous tax year. This actually makes perfect sense, to me. This process is called a pre-assessment, which seems to imply, they want to verify my claims before processing.

Given my previous year reassessment is still in process, I will include all the information from that process, just to be thorough. I am attempting to make the same claims that I am having reassessed, so it is better to give too much information, than not enough.

Remember, in these situations, always have a complete cover letter. The cover letter must identify the process identifier, and should inventory all the documentation you are sending.  I am also having my wife check what I am sending, it never hurts to have another set of eyes check things for you.

The only interesting part is that they are asking for receipts for my charitable donations, which has nothing to do with my reassessment. The value has gone up, but I am curious as to why they are asking for that as well.

What to Do?

I will be submitting them all on-line (for speed), and shall see what comes of this.

This is all part of the whole tax process, but does seem to be how this year is going for me as well (i.e. things that can get complicated, do get complicated).

Remember to keep those receipts too!

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A Tax Quandary

Thanks to my issues with my son’s Medical Credit claim, I have had an income tax quandary.

Given the initial assessment refused my son’s Medical Claim for his schooling to be a medical expense (for last tax year), I have asked for a reassessment. The bill for the initial refusal is not insignificant, however I am hopeful that we will prevail in the end.

Given I currently owe the CRA a significant amount of money, and my taxes are due, what to do?

First question: Do I do my taxes this year assuming my son’s schooling expenses are a medical expense or not, given the CRA has denied this for the past year? My call is that I will try to claim it this year, assuming we prevail with our re-assessment. If this thing backfires, I assume I am going to have a world more problems with the CRA, but let’s remain optimistic.

Next question, given I should be getting a refund from the CRA, should I file before I hear about the re-assessment results? If I file, with no resolution, the CRA will simply take my refund to pay my “debt” to them.

  1. If the reassessment ends up against my claim, I receive whatever is left from my refund, and the CRA is paid
  2. If the reassessment ends up for my claim, and the CRA has already taken their “payment” I must then ask for my money back, which will mean delays and more paperwork.

We decided to simply file and see what happens. Currently my life is a bit chaotic (to say the least), so it would be better to tie off loose ends before things possibly go pear shaped.

Better to Act Sooner

Given I may be very distracted soon by other issues, it is better to file my taxes, and let the CRA decide how things will transpire.

Medical Expense Resources

Here are a few of the articles I have written about if your child has a valid Disability Tax Certificate (DTC), how you can claim their training or schooling as a medical expense.


Going Pear Shaped: An English colloquialism meaning things going very wrong.


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Financial March Madness, Changing Frugal Lifestyles and #Moneytalk

March Madness is in high gear with the Elite 8 going on this weekend. As usual my bracket cannot win even though I still have 4 possible victors in the final four. My ability to prognosticate is pretty bad.

Gas prices are rocketing up in Ottawa, which suggests Inflation (or at least a higher CPI) is coming very soon. With the Carbon Tax there is talk of gas in Ottawa being $1.40 this summer. Maybe it is time to start looking at the Tesla again. We might all need to get a more frugal lifestyle, and soon.

With Brexit causing the UK no end of despair and confusion, this could be a very interesting summer financially. I don’t pretend to understand it all, but it does seem to be a “no win” scenario.

Remember that it is Tax Season, time to get all your documentation and get your return in to the CRA. If you owe money, you don’t have to pay until the deadline and if you are owed money, the sooner you get that money back, the better. Be patient if you call, wait times can be long this time of year.

Recent Articles

I am slowly getting back into the swing of things, but life is still quite interesting for me these days. 3 Ways To Pull Off This Season’s Coolest Financial Trend was really just a bit of click-bait. I really hate to think this is how folks are finding out information, but unfortunately click-bait continues to rule.

RDSP : A Really Long-Term Savings Plan points out with an actual example how big the penalties are for RDSP early withdrawals. I do have a few other examples of how the RDSP system works, so stay tuned.

I’d like to thank the Liberals for this easy tap-in story, RDSP and Budget 2019. They were kind enough to put in a clarification and a change of rules in their latest budget. I still haven’t got a definitive statement that this is now the law of the land, but we shall see.

Troubling and True

Kerry from Squawkfox has a very good point with this answer to a Tweet. Literacy is very important, but sometimes life serves up a big feces sandwich.

EQ Bank Savings Plus Account

Spending Habits

Interesting that two of my favorite reads had articles on spending habits in retirement. It is interesting to see life-time savers and frugal folk suddenly realize they have to change a habit they have had their whole life.B

  • Michael James (who surprisingly is not the most frugal person in his family) brings us Compensating for Your Money Personality. The word cheap could be used to describe someone as frugal as MJ and his wife, but that is not the right word. I think the word I’d use is driven, which explains things much better.
  • 2nd Career Search has returned from a stay in Florida, and he also writes on the same subject. Saver to Spender Transition explains how he and his wife had to learn to “loosen the purse strings”. If you don’t understand this, think of the chronic overspenders you know, and how hard it would be for them to become frugal.
  • Hoyes Michalos has made a documentary about Millennials & Debt – No Room to Maneuver. I am concerned about the life my children will be able to lead, and this does not help me sleep any better.
  • The Blunt Bean Counter gets into the spirit of Tax Season with The Top Tax Tips for Students. If you don’t take tax tips from an accountant, who should you take advice from?
  • Should you invest in pot stocks? How do you invest in the cannabis sector? That is a good question, my guess is I might enjoy some of the fruits of this new magic herb, but I doubt that I might invest in it directly.

The spring is coming, but slowly in Ottawa, but our friends from the UK might not believe it.

Our friends from the UK may not enjoy the Ottawa Spring

A Worrisome Tweet

Bankruptcy is a Growing Business

The 2019 Random Thoughts

My RSS feed is available.


No-Fee Scotiabank Value Visa

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RDSP and Budget 2019

Budget 2019 is finally out, and it has a whole treasure trove of goodies. It is truly an election year budget with promises of the future (if you reelect the current government).

I will allow much smarter folks to comment on other areas, but for Registered Disability Savings Plan there are two nice mentions.

RDSP Exempt from Seizure in Bankruptcies

Doug Hoyes and I talked about this on his podcast, but now it looks to be officially in grained in the system.

“Unlike RRSPs, amounts held in RDSPs are not exempt from seizure by creditors in bankruptcy. To level the playing field, Budget 2019 also proposes to exempt RDSPs from seizure in bankruptcy, with the exception of contributions made in the 12 months before the filing.” 

Budget 2019 Canada

I assume the bankruptcy laws may be changed one day, but this seems quite clear. The past 12 months of payments being not exempt makes sense as well.

RDSP Pay Back if DTC Lost

This has always been a big problem, and with the CRA cancelling DTCs left and right this is a good thing.

“To address concerns that this treatment does not appropriately recognize the financial impact that periods of severe, but episodic, disability can have on individuals, Budget 2019 proposes to eliminate the requirement to close an RDSP when a beneficiary no longer qualifies for the DTC. Doing so will allow grants and bonds otherwise required to be repaid to the Government to remain in the RDSP. To ensure fairness for DTC-eligible beneficiaries, some restrictions on access to these amounts will apply. The estimated cost of this measure is $109 million over five years, beginning in 2019–20, and $33 million per year ongoing. “

Budget 2019

Previously you had a short period of time where you had to pay back all grants and bonds, now you can leave the money there. I assume if you try to take money out you would have to pay back grants and bonds (and pay tax on any growth). There still is a few fine points to clarify here.

RDSP Not Forgotten

Glad to see the RDSP is not forgotten in the budget. Curious to see what the Loyal Opposition has to say about these areas come election time?

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