Mailbag: RRSP Home Buyers Plan

The Question:  A reader and first-time homebuyer emailed the following…

“Can I use the RRSP Home Buyers Plan (HBP) to pay the GST on my new home purchase?  Or can money from a RRSP account only be used for the mortgage downpayment?

The Answer:  According to CRA’s HBP Guide:

As long as you buy or build a qualifying home, and you meet all the applicable conditions to participate in the HBP, you can use the funds you withdrew under the HBP for any purpose.

So there you go.  Paying your new home's GST with HBP funds is fine.

In fact, you can spend the money on a 14-day cruise to Tahiti if you want to—assuming you want your $25,000 cruise to cost you $15,000 in interest.  (In case there's any uncertainty, that’s not recommended.)

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