The Home Buyers' Plan (HBP) is a program that allows you to withdraw from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability. The HBP allows you to pay back the withdrawn funds within a 15-year period.

How To Participate in the HBP

You can withdraw funds from more than one RRSP as long as you are the owner of each RRSP account. Your RRSP issuer will not withhold tax on withdrawn amounts of $35,000 or less. Some RRSPs, such as locked-in or group RRSPs, do not allow you to withdraw funds from them.

Certain conditions must be met in order to be eligible to participate in the HBP, including the following:

  • you must be considered a first-time home buyer

  • you must have a written agreement to buy or build a qualifying home, either for yourself or for a related person with a disability

  • you must be a resident of Canada when you withdraw funds from your RRSPs under the HBP and up to the time a qualifying home is bought or built

  • You must intend to occupy the qualifying home as your principal place of residence within one year after buying or building it. If you buy or build a qualifying home for a related person with a disability, or help a related person with a disability to buy or build a qualifying home, you must intend that that person occupies the qualifying home as his or her principal place of residence

  • In all cases, if you have previously participated in the HBP, you may be able to do so again if your repayable HBP balance on January 1st of the year of the withdrawal is zero and you meet all the other HBP eligibility conditions.

Do You Meet The HBP Eligibility Conditions?

  • You must be considered a first-time home buyer.

  • You must have a written agreement to buy or build a qualifying home for yourself.

Or

  • You must have a written agreement to buy or build a qualifying home for a related person with a disability, or to help a related person with a disability buy or build a qualifying home (obtaining a pre-approved mortgage does not satisfy this condition).

If you are withdrawing funds from your RRSPs to help a related person with a disability buy or build a qualifying home, it is the related person with a disability who must have entered into such an agreement.

Are You a First -Time Home Buyer?

Unless you are a person with a disability or you are helping a related person with a disability buy or build a qualifying home, you have to be a first-time home buyer to withdraw funds from your RRSP(s) to buy or build a qualifying home.

You are considered a first-time home buyer if, in the four-year period, you did not occupy a home that you or your current spouse or common-law partner owned.

Even if you or your spouse or common-law partner has previously owned a home, you may still be considered a first-time home buyer.

If you have a spouse or common-law partner, it is possible that only one of you is a first-time home buyer.

The four-year period:

Begins on January 1st of the fourth year before the year you withdraw the funds.

Ends 31 days before the date you withdraw the funds.

For example, if you withdraw funds on March 31, 2020, the four-year period begins on January 1, 2016 and ends on February 28, 2020.

Can You Participate in the HPB Later?

If you are not considered a first-time buyer now, you may be considered a first-time home buyer later, once the four-year period has passed.

For example, if in 2014 you sold the home you lived in before, you may be able to participate in 2019 or if you sold the home in 2015, you may be able to participate in 2020. 

Your RRSP Deduction May Be Affected By Your Participation in the HBP

 If you participate in the HBP, certain rules limit the deduction of your RRSP contributions made during the 89-day period before you withdrew the funds under the HBP. Under these rules, you may not be able to deduct part or all of the contributions made during this period for any year.

The following conditions must also be met in order to be eligible to participate in the HBP:

  • You have to be a resident of Canada at the time of the withdrawal.

  • You have to receive or be considered to have received, all withdrawals in the same calendar year.

  • You cannot withdraw more than $35,000.

  • Only the person who is entitled to receive payments from the RRSP can withdraw funds from an RRSP. You can withdraw funds from more than one RRSP as long as you are the owner of each RRSP. Your RRSP issuer will not withhold tax on withdraw amounts of $35,000 or less.

  • Normally, you will not be allowed to withdraw funds from a locked-in RRSP or a group RRSP.

  • Your RRSP contributions must stay in the RRSP for at least 90 days before you can withdraw them under the HBP. If this is not the case, the contributions may not be deductible for any year.

  • Neither you nor your spouse or common-law partner or the related person with a disability that you buy or build the qualifying home for can own the qualifying home more than 30 days before the withdrawal is made.

  • You have to buy or build a qualifying home for yourself, for a related person with a disability, or to help a related person with a disability buy or build a qualifying home before October 1st of the year after the year of the withdrawal.

  • You have to fill out Form T1036, Home Buyers' Plan (HBP) Request to Withdraw Funds from an RRSP for each eligible withdrawal. 

When Do You Start Making Repayments?

You have up to 15 years to repay to your RRSP, pooled registered pension plan (PRPP) or specified pension plan (SPP) the amounts you withdrew from your RRSP under the HBP.

Your repayment period starts the second year after the year when you first withdrew funds from your RRSP(s) for the HBP. For example, if you withdrew funds in 2020, your first year of repayment will be 2022.

If you choose to start your repayments earlier, your repayment period will stay the same. Any repayments made before you are required to start your repayments will reduce the amount you have to repay for the first year.

Repaying the Amount You Withdrew

You can repay the full amount into your RRSP, PRPP or SPP at any time.

Each year, the Canada Revenue Agency (CRA) will send you a Home Buyers' Plan (HBP) statement of account, with your notice of assessment or notice of reassessment.

The statement will include:

  • the amount you have repaid so far (including any additional payments and amounts you included on your Income Tax and Benefit Return because they were not repaid)

  • your remaining HBP balance

  • the amount you have to contribute to your RRSP(s), PRPP or SPP and designate as a repayment for the following year

Repayments do not affect your RRSP deduction limit. You can still contribute to your RRSP(s), PRPP or SPP and designate that amount as a repayment under the HBP, even if your RRSP deduction limit is zero.

You cannot claim as a deduction on your income tax and benefit return an amount you designated as a repayment.

To make a repayment under the HBP, you have to make a contribution(s) to your RRSPs, PRPP or SPP in the year the repayment is due or in the first 60 days of the year after. Once your contribution is made, you can designate all or part of the contribution as a repayment.