Q. I’m thinking of using our stronger dollar to purchase some vacation property in the US. What do you think of this strategy and can I use RRSP funds through the home buyer’s plan to do so?
A. Let me respond to your question in two parts.
As the RRSP Home buyer’s plan will not allow you to withdraw funds for vacation property, your only option to use RRSP funds would be through a regular withdrawal that is fully taxable. In this scenario factor in up to 30% of immediate tax withholding with taxes on the balance of the withdrawal due when you file your 2013 tax return in April 2014.
Although I don’t know your specific situation, I would say that if you were planning on buying foreign vacation property anyway, our stronger dollar along with potentially depressed US real estate prices might make for a good bargain.
However, I’m not so sure that I would rush out and buy foreign property just because it’s slightly cheaper. With any investment/vacation property there are other factors that should be addressed like the cost of upkeep, financing, taxation, insurance etc.
This article provides general information and does not constitute financial or other professional advice. Seek independent advice before implementing any of the strategies discussed.
Imran Syed, BA CFP CFSB TEP is an independent, fee only Certified Financial Planner and can be reached at www.feebasedadvisor.ca. Please send any home related, financial planning questions to him by email at homes@ottawacitizen.com
