Question from Jacques, one of our readers : I know I need to convert my RRSPs to a RRIF at age 71. I plan to liquidate a building after I turn 71. In order to reduce the capital gain, is it a good strategy to contribute to my RRSPs before age 71 and only use them when selling the property? Is there a deadline for deducting unused RRSP contributions?
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Answer: This could indeed be a good strategy, believes financial planner André Lacasse of Services financiers Lacasse, at least according to the information you have provided us.
First of all, remember that RRSPs must be converted into registered retirement income funds the year following the 71st.e anniversary.
But that doesn’t prevent you from contributing to your RRSPs until that date and keeping some contributions for later.
“If you plan to make a taxable capital gain in the future and have a tax bill to pay, contribute to your RRSPs before you turn 71 and use the deduction later,” advises André Lacasse.
A single obligation
For example, let’s say you contributed $ 20,000 to your Registered Retirement Savings Plans this year, and you’re only selling your building in five years.
Do not claim your tax deduction for the 2021 tax year, but for the one in which your capital gain will be taxable.
“You can use these contributions at a time that suits you best, it can be for the current fiscal year or on the contrary in several years. The only obligation is to convert your RRSPs into RRIFs afterwards, ”explains André Lacasse.
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