Yes, you can use your Registered Retirement Savings Plan (RRSP) to buy a rental property through a strategy called a self-directed RRSP. With a self-directed RRSP, you can invest in a wide range of assets, including real estate, as long as it complies with the rules set by the Canada Revenue Agency (CRA). However, there are several conditions and restrictions to consider:
1. You must set up a self-directed RRSP account with an eligible trustee or financial institution that allows real estate investments.
2. The property must be held within your RRSP, and all expenses related to the property, such as maintenance, repairs, and property taxes, must be paid from your RRSP.
3. Any rental income generated by the property will be tax-deferred within your RRSP, but it will be subject to taxation when you withdraw the funds in retirement.
4. You cannot personally benefit from the property until you reach the age of 71, which is the latest age at which you must convert your RRSP into a Registered Retirement Income Fund (RRIF) or annuity.
5. If you want to use your RRSP funds to finance the rental property purchase, you may need to hold the property within a self-directed RRSP mortgage, where the property acts as security against the mortgage loan.
It is crucial to consult with a financial advisor or tax specialist to understand the specific rules and consequences of using your RRSP to purchase a rental property. They can guide you through the process and ensure compliance with all applicable regulations.