top of page

TFSA Or Contribute To Your RRSP

Perhaps you just received a bonus or a big tax refund from the government, how should you make your money work harder to save up for a down payment more quickly?

The government has two popular tax-free programs that can help. Simply ask your local bank or investment advisor about the Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP). Both are great for savings but if your purpose is to use the funds for a down payment, there are advantages and disadvantages. Below is an overview:

Tax-Free Savings Account (TFSA) – Advantages

  • Any growth in your investment is tax-free.

  • There’s a wide range of investment options allowing you to put in or take out money a lot easier

  • Investment in this account does not affect your income taxes.

Tax-Free Savings Account (TFSA) – Disadvantages

  • Contributions do not help lower your taxable income that will result in a higher tax refund.

Registered Retirement Savings Plan (RRSP) – Advantages

  • Any growth in your investment is tax-free.

  • The amount put into RRSP will decrease the same amount of the income you file for taxes. You can only withdraw up to $25,000 and only if you are a first-time home buyer.

  • Using RRSP for a down payment is only available for first time home buyers. You can use up to $35,000.

Registered Retirement Savings Plan (RRSP) – Disadvantages

  • Putting money in RRSP is simply to postpone paying your taxes. Eventually you must withdraw it and pay taxes on it when you retire.

  • There’s a penalty when you take out the funds which makes this plan very restrictive unless if you are a first time home buyer. Then you can withdraw up to $35,000

If you want to learn more, watch my Youtube video to find out if TFSA or RRSP is better for your Downpayment!

Still want more info on how to save up for your down payment more quickly? Contact Arise Mortgage Corp. and we will guide you to the right direction.

1 view0 comments
bottom of page