First Time Home Buyers
RRSP Home Buyer's Plan – First Time Buyers
The RRSP Home Buyer's Plan is a federally instituted government program that allows you to withdraw up to $25,000 from your RRSP to buy or build a qualifying home.
To participate in the HBP, you must meet both the HBP eligibility conditions and RRSP withdrawal conditions.
Do I meet the HBP eligibility conditions?
• You must be considered a first-time home buyer.
• You must have a written agreement to buy or build a qualifying home for yourself, for a related person with a disability, or to help a related person with a disability buy or build a qualifying home (obtaining a pre-approved mortgage does not satisfy this condition).
• You must intend to live in the qualifying home as your principal place of residence within one year after buying or building it. If you buy or build a qualifying home for a related person with a disability, or help a related person with a disability buy or build a qualifying home, you must intend that that person lives in the qualifying home as his or her principal place of residence.
In all cases, if you have previously participated in the HBP, you may be able to do so again if your repayable HBP balance on January 1 of the year of the withdrawal is zero and you meet all the other HBP eligibility conditions.
Am I a first-time home buyer?
Normally, you have to be a first-home buyer to withdraw funds from your RRSPs to buy or build a qualifying home.
You are considered a first-time home buyer if, in the four year period, you did not live in a home that you or your current spouse or common-law partner owned.
Do I meet the RRSP withdrawal conditions?
- You have to be a resident of Canada at the time of the withdrawal.
- You have to receive or be considered to have received, all withdrawals in the same calendar year.
- You cannot withdraw more than $25,000.
- Only the person who is entitled to receive payments from the RRSP can withdraw funds from an RRSP. You can withdraw funds from more than one RRSP as long as you are the owner of each RRSP. Your RRSP issuer will not withhold tax on withdraw amounts of $25,000 or less.
- Normally, you will not be allowed to withdraw funds from a locked-in RRSP or a group RRSP.
- Your RRSP contributions must stay in the RRSP for at least 90 days before you can withdraw them under the HBP. If this is not the case, the contributions may not be deductible for any year.
- Neither you nor your spouse, common-law partner or the related person with a disability that you buy or build the qualifying home for can own the qualifying home more than 30 days before the withdrawal is made.
- You have to buy or build a qualifying home for yourself, for a related person with a disability, or to help a related person with a disability buy or build a qualifying home before October 1 of the year after the year of the withdrawal.
You have to complete Form T1036, Home Buyers' Plan (HBP) Request to Withdraw Funds from an RRSP for each eligible withdrawal
When do I start making repayments?
Your first repayment starts the second year after the year you withdrew funds from your RRSPs for the HBP. Generally, you have up to 15 years to repay to your RRSP the amounts you withdrew from them under the HBP. However, you can repay the full amount into your RRSP or PRPP at any time. Each year, the CRA will send you a Home Buyers' Plan (HBP) Statement of Account, with your notice of assessment or notice of reassessment.
For more detailed information visit the CRA site at http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html.