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Financial Issues This forum is for discussing any of the financial issues involved in your divorce.

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Old 09-27-2016, 10:07 AM
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Default Pre-marriage RRSP withdrawal First Home buyers program

Is the pre-marriage first home RRSP homes buyer plan withdrawal considered a debt(loan) in the NFP if it was paid back during the marriage? $20,000 was withdrawn from RRSP with yearly payback for 20 years during marriage. My ex used his RRSP as a down payment for our new home and I used cash - I feel I am being penalized in this situation as I contributed to the payback of this RRSP during our marriage. Is there case law that can support this as a debt on date of marriage for NFP calculation. Thanks
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Old 09-27-2016, 11:38 AM
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You still have the same value though.

You started with an asset in the form of cash, and ended with an asset in the form of real estate.

Your ex started with an asset in the form of RRSP, and ended with an asset in the form of real estate.

You are now dividing the real estate, and any other assets, which would include the growth in his RRSP that you helped him repay.

Equalization only looks at the snapshots of the financial situation at marriage, when you became one financial entity, and at separation, when you divide back into two financial entities. It doesn't care what happened with any finances in the intervening time, who paid for what, etc.
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Old 09-27-2016, 12:27 PM
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Yes, but this is really a loan on date of marriage, as it needed to be paid back or else we would incur taxes on the loan on a yearly basis. So wouldn't it be a loan/debt in the NFP on date of marriage?
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Old 09-27-2016, 12:39 PM
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This is not a loan. It was a withdrawal from his own savings account. But because it was from a tax-deferred savings account, there IS a tax liability. Basically if you don't replace the $$, you owe tax on the amount. Or conversely, if you pay it back, you miss out on tax reduction that you would otherwise get from that contribution.

So his premarriage NFP was the rrsp-20k.
You paid into his rrsp.
If home equity and rrsps are both split 50-50, then you get your share back.

Last edited by dinkyface; 09-27-2016 at 12:46 PM.
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Old 09-27-2016, 02:49 PM
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It's only a loan in the sense that he is repaying it to himself. If you had never bought a house, it would still be on his financial statement as of date of marriage as an asset.
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Old 09-27-2016, 03:05 PM
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Then how would my $20k cash as a down payment on the house be considered on date of marriage NFP? Isn't the ex benefiting from having used RRSP and having a spouse pay it back - while I used my cash savings?
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Old 09-27-2016, 03:15 PM
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Assuming his rrsp grew over then length of the marriage, you will be receiving the percentage of that value. Then you receive the percentage of the value increase of the house. You both paid $20,000 into the purchase of the house. If the rrsp had not been paid back you would have owed tax and not had as high an amount in the rrsp at the separation date. It all works out in the value split.
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Old 09-27-2016, 05:56 PM
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Did you buy the house before or after marriage?
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Old 09-27-2016, 08:29 PM
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Before marriage
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Old 09-28-2016, 12:53 AM
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So, at marriage, you had a house, with, say $40k invested in it. We know that came half from your savings in cash, and half from his RRSP, which is now basically empty. But the source of funds is irrelevant. It's only important that you know the value of the house and that the RRSP is zero and your savings account is zero.

Then, at separation, you had a house which is worth, say, $100k now, and his RRSP is up to $50k. The homebuyer loan has been repaid and more has been contributed.

Your merged net worth has increased by $110k (100+50-40) over the course of the marriage. So you each leave with $55k somehow.
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