RRSP Home Buyer's Plan
The Home Buyer’s Plan (HBP) is a government program that allows home buyers to withdraw up to $25,000 from their Registered Retirement Saving’s Plan (RRSP) to put towards buying or building a new home.
Before you can withdraw funds, you have to be entered into a written agreement that specifies whether you will be buying or building your new home. You also must occupy this space no later than a year after buying or building this new home.
To take advantage of this program you have to be considered a first-time buyer. You are not a first-time home buyer if you (or you and your spouse) has owned a home which you have occupied as your principal place of residence in the past 5 years.
Once those conditions are met each person can withdraw up to $25,000 tax-free from their RRSP for a new home. Couples, including common-law, can withdraw up to $50,000.
**Budget 2019 proposes to increase the Home Buyers' Plan withdrawal limit to $35,000. This would be available for withdrawals made after March 19, 2019.**
You will not pay income tax on these amounts as long as these funds will be repaid into an RRSP in the future.
Existing homeowners can also use this program to purchase an accessible home or a home for a disabled dependent relative.
The intended individual must qualify for the Disability Tax Credit (DTC) and this home must be more accessible or better suited to the care of this individual.
Repaying the amount you withdrew
Generally, you have up to 15 years to repay to your RRSP(s), Pooled registered pension plan (PRPP) or Specified pension plan (SPP) the amounts you withdrew from your RRSP(s) under the HBP. However, you can repay the full amount into your RRSP(s), PRPP or SPP at any time.
Each year, the Canada Revenue Agency (CRA) will send you a Home Buyers' Plan (HBP) statement of account, with your notice of assessment or notice of reassessment.
The statement will include:
- the amount you have repaid so far (including any additional payments and amounts you included on your income tax and benefit return because they were not repaid)
- your remaining HBP balance
- the amount you have to contribute to your RRSP(s), PRPP or SPP and designate as a repayment for the following year.
To make a repayment under the HBP, you have to make a contribution(s) to your RRSPs, PRPP or SPP in the year the repayment is due or in the first 60 days of the year after. Once your contribution is made, you can designate all or part of the contribution as a repayment.