Last updated: February 6, 2023
Last updated: February 6, 2023
The Home Buyers’ Plan (HBP) is a government program that lets Canadian residents withdraw up to $35,000 from their RRSP to buy or build their first home.
Couples (legally married or common-law) can withdraw up to $35,000 each, for a total of $70,000 towards the same home purchase. When you withdraw this amount, it’s like you’re borrowing from your RRSP.
To qualify as a first-time home buyer, neither you nor your current spouse or common-law partner can have owned a home in the four-year period leading up to the withdrawal. However, you don’t have to meet this requirement if you have a disability or if you’re making a withdrawal under the HBP for a relative with a disability. See the Canada Revenue Agency (CRA)’s persons with disabilities guidelines for more information.
Other conditions may also apply, such as:
For a complete list of requirements, please consult the Government of Canada’s guidelines on the HBP.
You must repay withdrawals made under the HBP within a 15-year period, otherwise, taxes will apply. You don’t have to pay income taxes on the money you take out of your RRSP if you make HBP repayments within the specified timeframe. You can make repayments to any of your RRSPs, a Pooled Registered Pension Plan (PRPP) or a Specified Pension Plan (SPP) within that 15-year period.
The 15-year repayment period begins two years after the calendar year in which you make the withdrawal. For example, let’s say you pull money out in 2024. In this case, you’ll have to start making repayments by the end of 2026 or within the first 60 days of 2027. If you don’t make the minimum repayment, you’ll have to include the portion of the amount you didn’t repay as income on your tax return.
If you’ve saved money in a tax-free savings account (TFSA), you can choose to use that money towards your new home instead of withdrawing from your RRSP under the HBP. Or you can use your TFSA in combination with your HBP withdrawals to buy or build a home.
You can also combine HBP withdrawals with withdrawals from your First Home Savings Account (FHSA) for the same qualifying home.
Connect with an advisor to find out which options are right for you
Yes, you can repay the HBP back early. But even if you choose to start repaying it earlier than required, it doesn’t reduce your repayment timeframe. You’ll still have to repay the full amount within 15 years. Please consult with a qualified tax advisor to find out if early HBP repayment meets your financial needs.
You’ll be taking a tax hit on the amount you didn’t repay as required in that year. The amount of tax you’ll have to pay depends on your annual HBP repayment amount or the shortfall in making that annual repayment and your tax bracket for that year.
Yes, you can use the HBP more than once if you’ve repaid your previous HBP and your balance is at 0. If you’re separated, divorced, or no longer living with your spouse or common-law partner, you also need to meet all the other HBP conditions that apply to your situation.
Yes, in certain situations, you can cancel your participation in the HBP. For example, you can cancel your HBP if you didn’t buy a home or if you become a non-resident of Canada before buying a home.
You’ll have to notify the CRA of your intention to cancel and repay the amount. Any portion of your withdrawal that isn’t repaid will have to be included as income in your income tax return. Connect with an advisor for more detailed information.
Yes, each spouse can withdraw up to $35,000 from their RRSP – making a total of $70,000. This is provided all conditions are met under the HBP. Two years after buying a home, each spouse must start making HBP repayments within a specified timeframe.
The CRA will send you a statement with the total amount you currently owe, as well as the minimum payment due.
You’ll also see your HBP account balance on your Notice of Assessment, as well as on your CRA MyAccount information. Additionally, you can contact the CRA to make inquiries about your HBP balance.
The CRA will send you a statement with the total amount you currently owe, as well as the minimum payment due.
You’ll also see your HBP account balance on your Notice of Assessment, as well as on your information. Additionally, you can contact the CRA to make inquiries about your HBP balance.