Home buyer's plan from RRSP

[markwu05]

I have read all the posts about RRSP, but my case is quite unique.
When we bought a house in Canada in 2004, we withdrew the maximum 40k(20k from each person) as the home buyer's plan allowed, then we moved to US on TN/TD and sold our house almost the same time in 2005. We are supposed to pay back the RRSP HBP withdrawal in 15 years, that is about 1333$/person/year, but we have decided to leave Canada permently, so what is the best way to stop paying back to RRSP and minimize tax/penalty ?

Thanks for any help

[Carson]

I have read all the posts about RRSP, but my case is quite unique.
When we bought a house in Canada in 2004, we withdrew the maximum 40k(20k from each person) as the home buyer's plan allowed, then we moved to US on TN/TD and sold our house almost the same time in 2005. We are supposed to pay back the RRSP HBP withdrawal in 15 years, that is about 1333$/person/year, but we have decided to leave Canada permently, so what is the best way to stop paying back to RRSP and minimize tax/penalty ?

Thanks for any help

The rule is that as emigrants of Canada, you must repay the remaining HBP balance within 60 days of leaving Canada. Otherwise, the balance goes into your income on your final emigrants T1 returns for 2005.

See here:

http://www.cra-arc.gc.ca/E/pub/tg/rc413 ... P414_42832

[Greg]

so what is the best way to stop paying back to RRSP and minimize tax/penalty ?

As Carson has pointed out either pay the money back within 60 days to your RSP or added it to your income for your final tax return.

[Carson]

so what is the best way to stop paying back to RRSP and minimize tax/penalty ?

As Carson has pointed out either pay the money back within 60 days to your RSP or added it to your income for your final tax return.

Your reported "date of departure" from Canada takes on a new dimension! i.e. if you have not repaid the HBP to this point (which would allow the money to stay in the RRSP's sheltered from Canadian tax; though not necessarily US State tax, depending on where you are now), and want to, you might be able to delay your reported date of departure to say, Dec 27th or so. Of course, the facts must support this later departure date and you would have to factor in any additional possible Canadian tax on your US earnings.

It's more likely though that you have missed the boat on most of the repayments and will have to pay Canadian tax (at your marginal rate) on the unrepaid HBP withdrawals on your 2005 T1 departure tax returns. Note, that you can still designate any earlier RRSP contributions (within 60 days of departure) as HBP repayments. You should do this to the maximum extent possible because it will preserve any unused RRSP contribution room for a future return to Canada, while the net tax impact will be the same.

[markwu05]

Thanks a lot.
I do not think I can delay the departure date from early August to near end of last year, so it looks like I need to add all the unpaid mount as RRSP withdrawl to my total income.

[nelsona]

Note that you would not need to add this 'income' to your US tax return