When saving for a down payment, Registered Retirement Savings Plans (RRSPs) and Tax-Free Savings Accounts (TFSAs) are both options for first-time home buyers.
With an RRSP, a first-time home buyer can withdraw up to $25,000 through the Home Buyers’ Plan (HBP), however this money must be paid back over a period of 15 years. Amounts not repaid are fully taxable.
With a TFSA, you can save tax-free and withdraw as much as you’d like. However, contributions to a TFSA, unlike an RRSP, are not tax-deductible.
Both options have advantages and disadvantages, and you should speak to a financial advisor to better understand which option is right for you – or you may consider a combination of both. You can also visit our article comparing TFSAs and RRSPs to learn more.