# Spousal RRSP and HBP questions



## jcgd (Oct 30, 2011)

I am trying to plan for when we buy our first home and I'm having trouble finding some answers on what I would expect are common questions.

My situation: I have over the maximum amount (25K) I am allowed to borrow via HBP in my RRSP. I would like to start contributing to a spousal rrsp in order for her to be able to borrow from the HBP as well. Where it gets tricky is that I only contribute to my RRSP because my employer matches 100% of around 9.5% of my salary. I contribute what they match as the bare minimum, but I don't contribute any extra out of pocket.
Currently, my contributions and the employer's initially go into a group RRSP. Once per year I transfer the funds into my discount brokerage. There are no limits to when I can transfer out of the group RRSP.

Questions:
1. Is it possible to transfer out of the group RRSP or my individual RRSP the funds which I want to put into the spousal rrsp rather than making deposits directly to the spousal RRSP?
2. Does the three year attribution rule apply when fund are used for the HBP? Ie. will the HPB funds pulled from the spousal rrsp go towards my 25K limit or my spouses? I idea is to be able to pull $50k in total to put down, or at least enough to reach a 20% down payment.
3. Right now I am towards the top end of the 32% tax bracket in Alberta. My partner is in the lowest bracket as she is in school full time. Shortly after we purchase a house these roles will reverse. Would it be wise to repay the HPB portion owed while I have a very low income, or take it as taxable income and put the money I would have repaid into a TFSA. 

Some notes: I don't know when I'll be working again, don't know where I'll be working after school, I don't know if my tax bracket will be higher or lower but will likely increase and I also don't know if I will continue RRSP contributions in the future. I would be using a TFSA right now if I didn't have employer matching. For any of the ideas above assume I have the contribution room or would manage within it. I have a general understanding of how the spousal RRSPs function.


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## OptsyEagle (Nov 29, 2009)

1) No. You cannot transfer from your personal rrsp to her spousal rrsp.
2) The 3 year attribution rule has no effect on withdrawals under the HBP. I can't say for sure that it doesn't kick in if the owner doesn't pay the money back, but I doubt it.
3) Would require a few calculations and even if it was better, it would definitely be pain now (tax on non-repayment) for some gain many years in the future. I would attempt to do both (pay back HBP withdrawal and put money in TFSA) but if not, I would probably pay back the HBP unless my tax rate was near 0%.

That being said, your tax rate will unlikely be near 0% because even if you earn income less then $11,000 (0% tax bracket), your higher income earning spouse will simply pay the tax on your non-repayment of HBP, by a reduction in her spousal tax credit, she would be eligible for.


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## stardancer (Apr 26, 2009)

jcgd said:


> I am trying to plan for when we buy our first home and I'm having trouble finding some answers on what I would expect are common questions.
> 
> My situation: I have over the maximum amount (25K) I am allowed to borrow via HBP in my RRSP. I would like to start contributing to a spousal rrsp in order for her to be able to borrow from the HBP as well. Where it gets tricky is that I only contribute to my RRSP because my employer matches 100% of around 9.5% of my salary. I contribute what they match as the bare minimum, but I don't contribute any extra out of pocket.
> Currently, my contributions and the employer's initially go into a group RRSP. Once per year I transfer the funds into my discount brokerage. There are no limits to when I can transfer out of the group RRSP.
> ...


Hope this helps


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## jcgd (Oct 30, 2011)

Thanks guys. I think that answers my questions.


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