The Home Buyers Plan (HBP)

by Tax Guy - Burlington Accountant on February 5, 2010 Print This Post Print This Post

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.

  1. The funds withdrawn must be used to acquire a home before October 1st of the year following the withdrawal.
  2. 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.
  3. 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.

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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Rebecca April 12, 2013 at 4:49 pm


When I purchased my first house the rule was that when you weren’t living in a home for three years you could qualify for first time home buyers again. Can you tell me when the rule changed from three years to five years?

Erin April 22, 2013 at 2:11 pm

I left a job and the pension benefits accumulated there ($18 000) must be transferred to a locked in RRSP. I qualify for the HBP and would really like to put this amount towards a downpayment in the next couple years. Is there any way I can use a locked in RRSP for the HBP? Thanks.

Tax Guy - Burlington Accountant April 22, 2013 at 11:37 pm

There is no way to use a locked in RRSP to fund the HBP.

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