Q: Last year, I borrowed $20,000 from my RRSPs and an additional $25,000 from my line of credit to purchase my first home. What is the maximum interest deduction allowed for tax purposes and how many years can I delay repaying my RRSP?
– Jay, Ontario
A: Individuals may borrow up to $20,000 from their RRSPs under the Home Buyers Plan (HBP) without being subject to income taxes. You will have to begin repaying RRSP starting two years after withdrawal.
Interest on borrowed money may only be deducted if it is used for investment or business purposes such as stocks, real estate investment, starting a business. Unfortunately, the purchase of a principal residence does not qualify.
