First Time Home Buyers' Plan
The Home Buyers’ Plan (HBP) allows first time homebuyers to withdraw their down payment from a Registered Retirement Savings Plan (RRSP) to purchase or build a home without having to pay tax on the withdrawal. The current withdrawal limit for this purpose is $25,000.
For HBP purposes, an individual is generally considered to be a first time homebuyer if neither the individual nor the individual’s spouse or common-law partner have owned and lived in another home in the calendar year in which the HBP withdrawal is made or in any of the four preceding calendar years.
Special rules apply to facilitate the acquisition of a home that is more accessible or better suited for the personal needs and care of an individual who is eligible for the disability tax credit, even if the first-time home-buyer requirement is not met.
Additional Facts about the HBP:
• Withdrawn funds must typically be used to acquire a home before October of the year following the year of withdrawal.
• Amounts withdrawn under the HBP are repayable to your RRSP account in equal instalments over a period not to exceed 15 years.
• To the extent that a scheduled repayment for a year is not made, it is added to the participant’s income for the year and taxed.
• A special rule denies an RRSP deduction for contributions withdrawn under the HBP within 90 days of being contributed.
Click here to go to the Canada Revenue Agency website page on the Home Buyers' Plan (HBP) website
Follow us on: