Much has been written about the use by our American cousins of their IRA funds to purchase foreign real estate investments in Costa Rica and elsewhere.

As it turns-out, Canadians have an equal, if not more envious option, using their RRSP (Registered Retirement Savings Plan) portfolio.

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Since the passing of the 2005 Federal Budget, the foreign content limit for RRSP’s was eliminated completely. That means that an RRSP portfolio may now consist of 100% foreign content.

In accordance with the provisions of Revenue Canada Bulletin IT-320R3, this is how it would work for a Canadian wishing to avail themselves of the use of funds in an RRSP portfolio, for the purchase of foreign real estate:

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  1. The RRSP portfolio would have to be administered under a plan trust.
  2. A mortgage is granted by the Beneficiary (the RRSP portfolio holder) of the plan trust over property owned by them in Canada, which mortgage “must be insured and be administered by an approved lender under the National Housing Act, under the National Housing Act, or by a corporation that offers its services to the public as an insurer of mortgages and is approved as a private insurer of mortgages”. Interest must be charged on the mortgage in accordance with the normal commercial practice and the mortgage must be administered by the approved lender in an “arm’s length” manner.
  3. The mortgage is an approved investment of the RRSP plan trust, and funds are advanced from the RRSP plan trust accordingly, to fund the mortgage.
  4. There are no restrictions on these funds advanced from the RRSP plan trust being used to purchase real property in a foreign jurisdiction such as Costa Rica.

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The interesting advantages available to Canadians using RRSP funds as described, over their American counter-parts using IRA funds to purchase foreign real estate, is that there is no restriction on the personal use of the foreign property purchased by Canadians, nor is their any restriction on mixing RRSP funds with after tax funds to make the foreign property purchase.

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Roland and Nadene Tipper are Canadian citizens who have lived in Costa Rica since 2008. As professional real estate sales agents in the Playas del Coco area, they offer the best service possible by providing accurate and up to date information so that their clients can make an educated decision when it comes to buying real estate in Costa Rica. Their focus is on customer service from start to finish and beyond and the fact that their clients become great friends says a lot.

For more information about Costa Rica condos for sale in the Playas del Coco area, please contact Roland and Nadene Tipper using the simple form below:

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There is one comment:

  • Julian at 11:59 am


    My name is Julian.

    I am a Canadian resident. I am interested to know the pros and cons of living/retiring in Costa Rica or buying and investing property in Canada and the tax issues both in Canada and C Rica.

    I will be visiting C Rica in early Oct. Do you provide commplimentary one-on-one services ?

    Have yourself a wonderful day.
    Thank you

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