CELIAPP appeals to many first-time home buyers or condominiums. However, it is impossible to contribute to the CELIAPP of one of your loved ones.
Depending on the context, it may be possible to contribute to your spouse’s RRSP. But not to his tax-free savings account for the purchase of a first property (CELIAPP).
This tax system is becoming increasingly popular with first-time buyers. At a time when access to property is becoming increasingly difficult for young people, more and more parents are supporting their children in purchasing their first home. But they cannot contribute to their heir’s CELIAPP, that is impossible.
One way to get around the ban is to make a donation to your child. The latter will then contribute to his CELIAPP himself. The same mechanisms apply to your spouse.
On the other hand, two spouses can each have their own CELIAPP. It’s even an advantage… However, conditions apply (find out more: bit.ly/3sxAeKZ).
Therefore, a young person is very interested in accumulating money in his CELIAPP before meeting his soul mate, especially if he is already the owner. If the couple finally decides to buy a new house, the young person can become co-owner using the funds accumulated in their CELIAPP.
CELIAPP, RRSP and RAP
Some first-time buyers combine CELIAPP and the Home Ownership Regime (RAP). But they need to plan accordingly.
For example, if you want to buy a house in two years, you can only use the maximum approved amount of $16,000 from the CELIAPP (cumulative over two years), while you have the maximum approved amount of $35,000 available from the RAP stands. Maybe it is necessary to wait two or three years. Of course, this assumes you have good saving skills…
If you finally give up on becoming an owner, you can always transfer the money from your CELIAPP to your RRSP without paying taxes or reducing the maximum allowable contribution to your RRSP!
Advice
- Since the amounts contributed to a CELIAPP do not affect contributions to an RRSP, employees who benefit from an employer pension plan based on a group RRSP have a double advantage.
- In the event of a divorce or cohabitation breakdown, it is not possible to transfer the investments in your CELIAPP account to your ex-spouse without tax consequences for you, unless you transfer directly to their RRSP (several conditions apply) . .apply and it is best to rely on a financial advisor or tax advisor).
- Are you building your house yourself or buying it from a developer? Under certain conditions you are entitled to RAP and CELIAPP. Contact your financial institution or government for information.
RAP and CELIAPP
rap
- Allows you to withdraw up to $35,000 from your RRSP: You have 15 years to pay back your RRSP.
CELIAPP
- Allows you to contribute tax-free up to an annual maximum of $8,000 with a lifetime cap of $40,000.