RRSP Home Buyers Plan

What is the HBP?

The RRSP Home Buyers Plan (“HBP”) is a federal government program that allows first time home buyers to currently withdraw up to $25,000.00 (the “Contribution”) from their RRSP to use in the purchase of their first home.

To qualify as a first time home buyer, the buyer may not have owned, or lived with a spouse or common law partner who owned, a principal residence beginning January 1st of the 4th year before withdrawal and ending 31 days before withdrawal.

How does it work?

A first time home buyer can withdraw up to $25,000.00 from his/her RRSP towards the purchase of a home. If the buyer is purchasing the home with a spouse who is also a first time home buyer, then they can both withdraw $25,000.00 each from their RRSP accounts.

Some conditions of the HBP:

• The buyer MUST be a first time home buyer and a resident of Canada at the time of withdrawal. The buyer MUST purchase or complete the build of the home before October 1st of the year following the withdrawal.

• Only RRSP contributions made 90 days before the withdrawal date may be used towards the Contribution.

• The buyer must intend to occupy the home as his/her principal place of residence no later than one year after buying or building it. Once he/she occupies the home, there is no minimum period of time in which he/she has to live there.

The buyer must repay the Contribution to his/her RRSP in annual installments equal to 1/15 of the Contribuiton amount, commencing the second tax year after the year of withdrawal and continuing thereafter for a period of fifteen years until the Contribution has been fully repaid to the buyer’s RRSP account. If the buyer does not repay the annual instalment in any given year, that amount due to be repaid will be added to the buyer’s income for the year and taxed as such.

Further information can be found on the CRA website here:

http://www.cra-arc.gc.ca/E/pub/tg/rc4135/rc4135-e.html