Home Buyers Plan

What is the HBP (Home Buyer's Plan?)

 The HBP is a program that allows you to withdraw up to $20,000 from your registered retirement savings plans (RRSP’s) to buy or build a qualifying home.  Withdrawals that meet all applicable HBP conditions do not have to be included in your income, and your RRSP issuer will not withhold tax on these amounts.  If you buy the qualifying home together with your spouse or other individuals, each of you can withdraw up to $20,000.

 Under the HBP, you have to repay all withdrawals to your RRSP's within a period of no more than 15 years. Generally, you will have to repay an amount to your RRSP's 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.

Qualifying home — A qualifying home is a housing unit located in Canada. This includes existing homes and those being constructed. Single-family homes, semi-detached homes, townhouses, mobile homes, condominium

units, and apartments in duplexes, triplexes, fourplexes, or apartment buildings, all qualify. A share in a co-operative housing corporation that entitles you to possess, and gives you an equity interest in, a housing unit located in Canada also qualifies. However, a share that only provides you with a right to tenancy in the housing unit does not qualify.

Can a withdrawal be made from any RRSP?

 You can only withdraw funds from an RRSP under which you (the participant) are the annuitant. If your spouse contributed to your RRSP, you are the annuitant of the RRSP, even if your spouse deducted the contributions from taxable income. If you contributed to your spouse’s RRSP, your spouse is the annuitant of the RRSP, even if you have deducted the contributions from your income.

 Some RRSP's, such as locked-in or group RRSP's, do not allow you to withdraw funds from them. Your RRSP issuer can give you more information about the types of RRSP's that you have and whether or not withdrawals under the HBP can be made from them.

 

What are the conditions for participating in the HBP?

 A number of conditions have to be met to participate in the HBP. While some conditions have to be met before you can withdraw funds from your RRSP's, others apply when or after you receive the funds.

 

Conditions you have to meet before applying to withdraw funds under the HBP.

 

  • You have to enter into a written agreement to buy or build qualifying     home.
  • You have to intend to occupy the qualifying home as your principal place of  residence.
  • You or your spouse have not owned a home, which you occupied as your principal residence in any of the past five calendar years.

 

Conditions you have to meet when a withdrawal is made.

 

  • You have to be a resident of Canada.
  • You have to complete Form Tl036.
  • You have to receive all withdrawals in the same year.
  • You cannot withdraw more than $20,000.

  

You have to enter into a written agreement to buy or build a qualifying home.

 To withdraw funds from your RRSP's under the HBP, you must first have entered into a written agreement to buy or build a qualifying home. Obtaining a pre-approved mortgage does not satisfy this condition.

 

You have to intend to occupy the qualifying home as your principal place of residence.

 When you withdraw funds from your RRSP's under the HBP, you have to intend to occupy the qualifying home as your principal place of residence no later than one year after buying or building it. Once you occupy the home, there is no minimum period of time that you have to live there.

 

You have to be considered a first-time home buyer.

 Generally, before you can withdraw funds from your RRSP's to buy or build a qualifying home, you have to meet the first-time home buyer’s condition.

 You are not considered a first-time home buyer if, at any time during the past five calendar years you or your spouse owned a home that you occupied as your principal place of residence. 

Neither you nor your spouse can own the qualifying home more than 30 days before the withdrawal.

 You cannot withdraw an amount from your RRSP under the HBP if you or your spouse owned the home described on Form T1036, Home Buyers’ Plan (HBP) — Request to Withdraw Funds from an RRSP, more than 30 days before the date of your withdrawal. 

You must be a resident of Canada.

 You have to be a resident of Canada when you receive funds from your RRSP's under the HBP and up to the time a qualifying home is bought or built. If you are not sure whether you are a resident or non-resident of Canada, or you need more information about residency status, contact your tax services office.

 

You have to complete Form T1036.

 

 To make an eligible withdrawal under the HBP, you have to use Form T1036, Home Buyers’ Plan (HBP) — Request to Withdraw Funds from an RRSP.

 

You have to receive all withdrawals in the same year.

 To participate in the HBP, you have to receive all the withdrawals from your RRSP's in the same year.

 

You cannot withdraw more than $20,000.

 You can withdraw up to $20,000 from your RRSP's under the HBP. You can make more than one withdrawal as long as the total of your withdrawals is not more than $20,000. If you buy the qualifying home together with your spouse or other individuals, each individual can withdraw up to $20,000.

 

Repaying your withdrawals.

 Over a period of no more than 15 years, you have to repay to your RRSPs the amounts you withdrew under the HBP. Generally, in each year of your repayment period, you have to repay 1/15 of your original HBP balance until the full amount is repaid to your RRSPs. Your repayment period starts the second year following the year you made your withdrawals.

 

Situations where the repayments have to be made in less than 15 years.

 

Additional repayment rules apply if an HBP participant:

  • dies;
  • becomes a non-resident or
  • is 70 years of age or over.

 

 

 

Note:

This is only a brief guideline.  For a full and complete explanation please contact the source of these pages, Canada Customs and Revenue Agency and ask for the pamphlet “Home Buyers’ Plan”.