RRSP Home Buyers’ Plan (HBP)
The Government of Canada’s Home Buyers’ Plan allows
qualified buyers to withdraw a maximum of $25,000
tax free from their RRSPs to purchase or build a house.
If your spouse is also eligible, you can each withdraw
up to $25,000 towards the down payment for a total of
$50,000. No income tax is deducted from these funds,
as long as they are repaid to the RRSP according to the
government’s repayment schedule.
How the Plan Works
You may participate in the plan if you (or your spouse)
have not owned a home which you occupied as your
principal residence in the last five years.
The money you withdraw from your RRSP must be
repaid over a period of no more than 15 years to retain
its tax deferred status. Your repayment period starts
the second year following the year you made your
withdrawals. If you pay less than your scheduled annual
payments, the amount that you don’t repay must be
reported as income on your tax return for that year.
For example, in October 2011 you withdraw $24,000
from your RRSP to finance the purchase of your home.
Your first annual repayment of $1,600 ($24,000 divided
by 15 years) is due by December 31, 2013.
For more information, go to the Canada Revenue
Agency web site at www.cra-arc.gc.ca and search for
“Home Buyers Plan.”