3 options for using your RRSP to buy an income property

3 options for using your RRSP to buy an income property
3 options for using your RRSP to buy an income property

You might think that using your RRSP to buy an income property is a great idea. Now, there are many things to consider.

The answer is not simple and deserves in-depth analysis. It is important to note that an RRSP cannot directly contain an income property. This plan was designed for more liquid assets, such as money, guaranteed investment certificates (GICs), stocks, etc.

Here are some available strategies:

Option 1: Take out your RRSPs

Of course, it is always possible to withdraw funds from your RRSP, pay taxes and make the purchase. However, this carries significant tax consequences. Withdrawals made from your RRSP are taxed as ordinary income. If you have income from employment, your withdrawal could push you into a higher tax bracket.

It is therefore generally advisable to avoid this option when purchasing an income property.

Option 2: The RAP (Property Ownership Plan)

The RAP is a program intended for first-time home buyers. So, if you already own a home, you cannot use this program. On the other hand, if you are not, you can draw up to $35,000 per spouse from your respective RRSPs to purchase an income property.

A very important condition to respect is that you must be the owner-occupant in one of the dwellings of the income property that you intend to purchase.

This program is flexible regarding the type of building: duplex, triplex, quadruplex or buildings with five or more units: all are accepted.

In addition, the HBP allows you to rebuild your RRSP over time, without tax penalties, by following a precise repayment schedule.

Rental income helps pay part of the expenses, including the mortgage, and you potentially benefit from real estate capital gains.

Option 3: REITs (Real Estate Investment Trusts)

Investing in a REIT allows you to indirectly own real estate and receive distributions inside your RRSP. A REIT owns and manages real estate. These buildings can be office towers, residential rental real estate, commercial, etc.

However, unlike direct income property, they do not offer the tangible benefits of owning an income property. You do not have control over operational aspects such as rent collection or property improvements.


In summary, although RRSPs can offer some options toward real estate investing, they are generally more suited to other types of investments.

Investing in real estate via your RRSP is therefore fraught with restrictions. An alternative may be to use the equity available in your current residence and use it as a down payment towards the purchase of an income property. Quebec financial institutions facilitate this process. The principle is to take 80% of the value of your house less the remaining amount of the mortgage, this gives you the amount available to invest in an income property.


  • Meet with your financial institution’s advisor to tell them about your intentions. He will advise you on the procedure to follow.
  • Do an assessment of the tax impact before withdrawing from your RRSPs.
  • Analyze the real estate market and the profitability of buildings before launching.
  • Always have a contingency plan when investing in income property, especially for unexpected expenses.


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