RRSP Income Property | RRSPs and RRIFs | Discussion forum

I see. I must have mis-read your post. I thought you had said $250,000.
So you're not exactly cashing it per se. You are using a provision that exists for borrowing the money, on a schedule.

As I said earlier, CRA can be sticky about residency. You should avoid anything that suggests you may not have "intended" to keep it as your primary residence. It's obvious you already have this in mind, so I would advise against it. The purpose of this provision is to enable people to have home ownership, not to finance rental properties. "Intention" is a problematic word in CRA's vocabulary, and they hold the cards in its definition, which may be a matter of interpretation. I don't think they will ever advise you in advance in a way that allows you to decide if rental will be an option. See the discussion elsewhere here about TFSAs and day trading versus investing.

As long as the home really is or is intended to be your principal place of residence you meet the stated conditions. There is no requirement to use it as such for any stated length of time (if they had intended that they would have included that requirement, would be my argument to a judge). Note also, for capital gains purposes, that principal residence can be designated - for example if you live in town and also have a cottage you use as a secondary residence it is still possible to designate the cottage as your principal residence for whatever years you choose, if that's what you want to do at time of sale. So there's some flexibility here re the definition. Plus maybe they don't have much enforcement in this area, it's small amounts, it's not really an area of great tax loss exposure for the Fed as you have to repay your RRSP, hardly anyone would do what you're doing, etc. But if you live there briefly as you indicate, CRA might look more closely at the entire transaction - might be flagged if your address on that year's tax return is a different one! In your case, they would likely assume it's a scheme so would be looking for evidence they might not normally do - e.g. did you change your drivers license address? your mail delivery? address changed with banks, etc? was the mortgage, insurance, etc set up as residential vs rental, what other evidence can you provide in this untypical case that you actually used it as your principal place of residence?, etc, etc. But as you could produce all the relevant documentation, if I was CRA I'd focus my argument on the idea that "principal place of residence" is normally referred to in terms of years, i.e. the length of time (a month or two) here does not fall into the general tax concept of "principal place of residence" to begin with. There may be some jurisprudence out on this, maybe someone else know.

Not necessary to spend money. Two options to contest reassessments are available - both cost zero dollars, though do cost some time:

1. CRA Appeals Division (impartial party, they often try to "make a deal" unless taxpayer clearly wrong), zero cost, and/or

2. Tax Court of Canada, Informal Procedure (if amount of tax in dispute is up to $25K), zero cost, designed for regular Canadians to self-represent their case in an informal setting before a tax court judge.

Despite impression given by mainstream media, many Canadians might be surprised at how successful one can be using these venues assuming your case has merit and you are well-prepared to articulate it.

You're right, if you're a real "problem" you will get flagged, but if you just have a valid issue of disagreement that shouldn't have any impact on future dealings. My experiences with CRA indicates that if you've generally been compliant with your filings, etc over the years (they can see pretty quickly who are the "problem" filers) once you get past the front line staff (lower paid, churning out units of production, see what sticks to the wall) and get to some folks inside they're very reasonable. CRA likes to send out letters which indicate bad things might happen if you don't immediately comply (indeed, they rely a lot on their
"reputation" to do their work for them) but if your case has merit and you pursue it (which the accounting and legal professions like to indicate requires their paid help) the chances of success are good. Of course, a lot of folks are hiding other tax stuff so are happy to give in on an issue so that CRA just goes away. Those are often the folks you read about in media articles about CRA horror stories - once you dig deeper you realize the article has not given the whole story. (Also I've noticed a lot of younger folks now fear verbal communication so I do think CRA is increasingly sending out more letters that come out of the blue as far as the receiver is concerned.)

jacksparks, if your intention when you buy it is to live in it, and in fact you do, then I don't see a problem with your RRSP plan. You seem not to have a specific plan or deadline for moving, you may in fact live there for longer than you plan today. Plus people are allowed to change plans. And, as I said, there's no specific requirement to live there for a period of time, they left that out on purpose I'd assume. You can do the HBP once, so if you choose to use it up now, so be it. (I'm kind of wondering why you don't just wait a bit if you're thinking of another possible living arrangement change within a couple of months? But us older guys forget how so very long a couple of months is to the young, plus it's none of my business!)