How Do I Use the Home Buyer’s Plan?



You may know that with the Home Buyer’s Plan (HBP), you can withdraw up to $25,000 from your Registered Retirement Savings Plan (RRSP) to put towards a down payment. So if you are planning to use your RRSP, you should also know what the rules are, how to withdraw the money tax free, and when you need to pay it back!

You, as the plan owner can withdraw from more than one RRSP account and taxes will not be withheld by the issuer. Contributions must be held in the RRSP account for at least 90 days before withdrawal or else they may not be deductible.

Before you can use the money from a RRSP, you must have entered into a written agreement to buy or build a qualifying home. The home in question must be your intended primary residence. You also need to fill out a request form prior to withdrawing any funds.

Using the HBP again? Yes, if you meet the qualifications of being a first-time home buyer, can use the plan more than once. However, the balance owing for a previous withdraw of your RRSP must be zero on January 1st of the year you plan to withdraw again.


What homes qualify? 

According to the Canada Revenue Agency (CRA) website, a qualifying home is stated as:

… a housing unit located in Canada. This includes existing homes and those being constructed. Single-family homes, semi-detached homes, townhouses, mobile homes, condominium units, and apartments in duplexes, triplexes, fourplexes, or apartment buildings all qualify. A share in a co-operative housing corporation that entitles you to possess, and gives you an equity interest in a housing unit located in Canada, also qualifies. However, a share that only provides you with a right to tenancy in the housing unit does not qualify.


Who qualifies as a first-time home buyer?

Obviously, if you have never owned a home or have not owned your principle residence for at least four years, you are considered eligible for the HBP. If you’re not sure, take this CRA quiz to see if you qualify.

When do I have to pay back to my RRSP? 

The full amount must be paid back within 15 years and repayment “starts the second year following the year you made your withdrawals.” Typical payments are 1/15 of the entire amount that was withdrawn and if you make a lesser payment than that was required,”you have to include the difference as RRSP income on line 129 of your tax return.”

Get more details from the CRA website about the Home Buyer’s Plan.

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