New to Real Estate · Member since 2019 · 3 posts · 0 votes
Is it possible to use your RRSP without penalty on a creative finance deal such as rent to own or subject to deals? I have a buyer with certain amount of cash but doesn't qualify for bank mortgage. Would be great to find a way to use her RRSP money without penalty.... or does that only work if you have a mortgage in your name? Cheers
This is really an accountant question as to how you can structure to use your RRSP's as an investment with it still being arm's length away so that you do not get taxed on it until it is used for the purchase at the end of the rent to own period.
This is really an accountant question as to how you can structure to use your RRSP's as an investment with it still being arm's length away so that you do not get taxed on it until it is used for the purchase at the end of the rent to own period.
Several of my clients have successfully used a Self-Directed Plan (RRSP, TFSA, etc.) to hold a mortgage against their own personal residential property. In this scenario, you are lending money to yourself as an individual, it allows you to make regular mortgage payments to yourself rather than paying the P+I to a bank or other lender.
The first step is to qualify for a Non-Arm’s Length Mortgage with a financial institution.
@Caley Crossman Hi I had the same question you had. I am in a position where my rent will be increased significantly soon, and I was making plans to buy a home in the next 2-3 years already. So, I am in a position right now where I am looking to get into a rent to own program so I can move into my own home. However I may need more cash to give to rent to own as a down payment to move into the house after their investor purchases it. I was wondering if I can use my RRSP to give to the rent to own? Does anyone know this answer, or can help lead me to it? Any experience or advise will be helpful. Thanks
Also, @Roy Cleeves Do you have any insight on this? You mentioned arm's length. I am not sure about this. I wonder if the investor (rent to own) will accept RRSP as a down payment. Does anyone know which rent to own company is best for this option? ( In London, and St. Thomas Ontario Area)
@Julie Toh Hi I see that you know so much about these topics. I want to know if I can use my RRSP to enter in to a rent to own agreement. This is in St. Thomas/London Ontario.
Hi @Sarah Maraj, I am a Mortgage Agent and CPA just outside of London and recently looked into rent to own using RRSPs for another client. The rent to own company requires you to have 3% of the purchase price for a down payment but using RRSPs would result in standard penalties for removing these funds. You can use your RRSPs for the actual purchase (when you buy the property from the rent to own company) without penalty as long as it's your first property using the Home Buyers Plan.
My question would be, do you have enough to get to a 5% down payment with using your RRSPs and qualify to buy a home on your own? I'd be happy to have a chat and discuss your options.
@Caley Crossman Hi I had the same question you had. I am in a position where my rent will be increased significantly soon, and I was making plans to buy a home in the next 2-3 years already. So, I am in a position right now where I am looking to get into a rent to own program so I can move into my own home. However I may need more cash to give to rent to own as a down payment to move into the house after their investor purchases it. I was wondering if I can use my RRSP to give to the rent to own? Does anyone know this answer, or can help lead me to it? Any experience or advise will be helpful. Thanks
Also, @Roy Cleeves Do you have any insight on this? You mentioned arm's length. I am not sure about this. I wonder if the investor (rent to own) will accept RRSP as a down payment. Does anyone know which rent to own company is best for this option? ( In London, and St. Thomas Ontario Area)
Hi Sarah - best to try JAAG - they do Rent to Own. They are in London. +1 866-522-4669.
HI @Adam Legg Thanks for your reply. I appreciate the information you shared. I do not quality for a mortgage. However I am on track to qualify later on. I am looking to get into a rent to own soon. I will contact you.
"The rent to own company requires you to have 3% of the purchase price for a down payment but using RRSPs would result in standard penalties for removing these funds"
I have a question please, so if a person accepts the standard penalties can this be done (use RRSP for rent to own, after the investor purchases the property and before I actually get my mortgage) ?
"The rent to own company requires you to have 3% of the purchase price for a down payment but using RRSPs would result in standard penalties for removing these funds"
I have a question please, so if a person accepts the standard penalties can this be done (use RRSP for rent to own, after the investor purchases the property and before I actually get my mortgage) ?
Anyone can pay the penalty and take money out of their RRSP at anytime. At that point, it is simply cash and you can do what you want...just keep enough to pay the tax man.