The Home Buyers Plan allows you to borrow up to $25,000 from your RRSP’s tax free to buy or build a home. Each plan holder may withdraw up to the $25,000 limit their RRSP accounts except for locked-in accounts. This means that the combination of withdrawals from you and your spouses’ RRSP’s cannot exceed $50,000.
Who Qualifies For The HBP?
You can use the HBP if:
- You or your spouse have not owned and occupied a home as your principal residence in the preceding 4 years, or
- You are buying or building a home for a disabled person who is related to you.
Do The Funds Have To Be Used To Build or Buy A Home?
No. You can use the funds for any purpose you like. You only have meet the qualifications.
Is There Any Tax On the HBP Withdrawal?
The withdrawal under the HBP is tax-free but there are things you have to do to ensure the withdrawals remain tax free.
- The funds withdrawn must be used to acquire a home before October 1st of the year following the withdrawal.
- The funds must be repaid to your RRSP over a maximum of 15 years. These repayments begin in the second year following the HBP withdrawal. The minimum repayment is 1/15th of the actual HBP withdrawal. If you do not make a repayment, 1/15th of the withdrawal will be added to your income in the year is was due.
- To ensure you have disclosed your repayment appropriately, be sure to complete Schedule 7 of your Federal Income Tax Return.
First Time Home Buyers Tax Credit
If you bought a home after January 27, 2009, you may be entitled to claim the $2,000 first time home buyers tax credit. This is a non-refundable tax credit that can be claimed either by the purchaser of the home or their spouse.
Related Articles
- The Life Long Learning Plan (LLP)
- Drawing Income From Your Home
- Withdrawing From A Spousal RRSP
- Defined Contribution Pension Plan
Print This Post
{ 74 comments… read them below or add one }
← Previous Comments
Reading the posts it seems obvious that both spouse/common law partners must qualify to use the HBP. My scenerio is a little different in that I would like to buy a home with my girlfreind who I do not live with currently. She is a homeowner already and I am not. Can I still use my $25k as I would be considered a first time homebuyer.
If you have owned a home before and you are not common law, then you qualify. Be careful if you move in with her as you may suddenly fund yourself as common law, which is someone living with you in a conjugal relationship for the last 12 months.
The CRA actually has a quick questionnaire that helps answer the question here.
Hi there I was hoping you could help me with an inquiry on the HPB withdrawl. I took out a withdrawl in December 2010 and I have been making deposits biweekly to my rrsp ever since then. Now the total of these deposits are more than 1/15th of the withdrawl but I am unaware as to whether these deposits are automatically counted as me paying back, or do I have to let CRA know that I am paying it back?
Just confused on how this works… Any help would be appreciated.
Thank you!
Melissa
You will designate any contributions as repayments on your 2010 tax return.
← Previous Comments
{ 2 trackbacks }