Investing in your RRSP or your HOME, which is best?
Did you know:
If all of your wealth is concentrated in your principal residence, you might see its value grow over the years, and your capital gain will be tax exempt. But there’s a catch: how are you going to draw an income from this asset during retirement? You would have to sell the house, buy something smaller, switch to renting, borrow against your home equity… In other words, if you live in your retirement savings plan, how can you ever cash it in? It’s something to think about.
By investing in an RRSP, you can spread your investments among various asset classes and thus balance your risk, reduce volatility and optimize your potential returns. When you invest in your house, your investment is concentrated in one single investment. And the real estate market is not immune to ups and downs.
Since 2016, when you sell your house, you have to include information in your tax return to prove that it really was your principal residence: purchase date, proceeds of sale and description of the property.
With an RRSP, a TFSA and your house, you have three tax-efficient investment vehicles to help you reach your objectives: saving for retirement, funding your other plans, putting a roof over your head… Picture an integrated plan!
Click here to view additional information: Planning a PROJECT or Retirement.
Click here to view the Canada Revenue Agency(CRA): Sale of Principal Residence Reporting.