Home Buyers Plan (HBP)
What is the HBP?
Also referred to as the First Time Home Buyers Plan, the HBP is a program that allows you to withdraw up to $25,000 from your registered retirement savings plans (RRSPs) to buy or build a qualifying home. This is commonly used with First Time Home Buyers because you cannot own a home that you and/or your spouse lived in while married or common law within the past four calendar years and 31 days before the withdrawal.
The benefit of this program is withdrawals that meet all applicable HBP conditions do not have to be included in your taxable income, and your RRSP issuer will not withhold tax on these amounts. If you buy the qualifying home together with your spouse or common-law partner, or other individuals, each of you can withdraw up to $25,000 tax free from your RRSP account(s).
The down payment money does have to be withdrawn in the same calendar year or before the end of January of the following year.
You can withdraw the money ahead of time but you have to buy the home before October 1st the following year in order for that money to qualify for the Home Buyers Plan.
Another aspect to the program is when you take ownership of the new home. You can own the subject home for up to 30 days before the RRSP withdrawal, which technically means you could buy the property and take possession once the RRSPs have been in your account for at least 60 days, then do the withdrawal as soon as you reach 90 days. You would need to use your savings or some other means for down payment in the meantime.
Under the HBP, you have to repay all withdrawals to your RRSPs within a period of not more than 15 years. Generally, you will have to repay an amount to your RRSPs each year until you have repaid the entire amount you withdrew. If you do not repay the amount due for a year, it will be included in your income for that year.
Following is a complete guide that contains all the information you will need. Also included is the application form.
Home Buyers Plan (HBP) Guide
Home Buyers’ Plan Application
If you have any questions regarding the program, feel free to give us a call. It is a great program for many first time home buyers to access their RRSPs for down payment on their first home while still being able to defer the income tax owed on their RRSP money to some time further down the road.