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Can people use their RRSPs for real estate transactions?

As older Canadians move towards retirement age, many are considering how best to invest inside their RRSPs. One of the options available for Alberta savers is to invest in real estate. However, those seeking to use their RRSP to support real estate transactions and property investments should know some of the legal restrictions and regulations related to these holdings.

There are some types of real estate investments that cannot be held inside an RRSP. For example, Canadians cannot buy a rental property with their RRSP savings. Many opt instead to buy a Real Estate Investment Trust (REIT) trading on the stock exchange. These are similar to mutual funds in that they pool together real estate holdings. This allows investors to benefit from real estate investments without taking the risk or upfront cost of purchasing property.

Mortgage investment corporations (MICs) are another option. With these, Alberta residents can invest in debt used to purchase real estate. People can also hold their personal mortgages in an RRSP, though this is not very commonly done.

There are many different ways to benefit from the real estate market using ones RRSP; however, these options all involve indirect investments and holdings. Those who wish to purchase a rental property or "flip" a house must conduct such real estate transactions outside of their RRSP. The only exception to this rule is that first-time home buyers can borrow against their RRSP for a down payment. Those seeking answers regarding Alberta real estate law, including questions about legal standards with real estate investments and mortgage holdings, are advised to seek information from a lawyer. A lawyer should also be involved in overseeing any real estate transactions one makes.

Source:, "How to use your RRSP for real estate investing", Jason Heath, Oct. 10, 2017

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