RRSP Home Buyers' Plan

The Home Buyers' Plan (HBP) is a program that allows you to withdraw up to $25,000 in a calendar year from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability. Couples and common-law partners can withdraw up to $25,000 each.

For example: Alex and Michelle, young couple, can withdraw up to $25,000 from their RRSPs for a total of $50,000, allowing them to contribute more towards their down payment.

Note: 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.

Eligibility Conditions:

1. You must be considered a first-time home buyer
2. You must have a written agreement to buy or build a qualifying home for yourself or a related person with a disability
3. You must intend to occupy in the qualifying home as your principal place of residence within one year after buying or building it

Note: Even if you or your spouse or common-law partner has previously owned a home, you may still be considered a first-time home buyer.

The four-year period begins on January of the fourth year before the year you withdraw funds. It ends 31 days before the date you withdraw the funds. For example: If you withdraw funds on March 31, 2019, the four-year period begins on January 1, 2015, and ends on February 28, 2019.

Participate in HBP again:
If you have previously participated in the HBP, you may be able to do so again if your repayable HBP balance on January 1st of the year of the withdrawal is Zero and you meet all the other HBP eligibility conditions.

Withdrawal of Funds:
If you receive a withdrawal in one year and another in January of the following year, we consider the January withdrawal to have been received in the year the first withdrawal was made. If the January withdrawal is received before you acquire your qualifying home, or no later than 30 days after you acquire it, and all the other relevant conditions described in the chart below are met, it is an eligible withdrawal. For this purpose, your HBP balance on January 1st is not a relevant condition and does not have to be zero.

If you meet the applicable HBP conditions, you cannot withdraw more than $25,000. Your RRSP issuer will not withhold tax from the funds you withdraw that total $25,000 or less. An amount exceeding $25,000 will have to be reported as income on your income tax and benefit return for the year you received it. In addition, your RRSP issuer will have to withhold tax on the amount in excess at the time of the withdrawal.
 

Your RRSP deduction may be affected by your participation in the HBP

If you participate in the HBP, certain rules limit the deduction of your RRSP contributions made during the 89-day period before you withdrew funds under the HBP. Under these rules, you may not be able to deduct part, or all of the contributions made during this period for any year.

Repay the Funds withdrawn:

1. Your repayment period starts the second year after the year you withdraw funds from your RRSPs for the HBP
2. You have 15 years to repay the amounts you withdraw from your RRSP under HBP. However, you can repay the full amount at any time.

Note: Home buyers withdrawing funds do not have to pay the income tax on the amount withdrawn, as long as the funds repaid into an RRSP in the future.

Existing homeowners can use the HBP to purchase a more accessible home or a home for a disabled dependent relative where the individual withdrawing the funds:

• Qualifies for the disability tax credit (DTC) and is buying a home that is more accessible for the individual or is better suited for the care of the individual.
• Is related to a disabled individual who qualifies for the DTC and is buying a home for the benefit of the disabled individual that is more accessible for, or better suited for, the care of the disabled individual.
• Is related to a disabled individual who qualifies for the DTC and is withdrawing an amount for the disabled individual to buy a home that is more accessible for, or better suited for, the care of the disabled individual.