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The
Home Buyer's Plan (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. If you buy a qualifying home with your spouse or
common-law partner, or with other individuals, each of you can
withdraw up to $25,000.
NOTE: Budget 2019 proposes to increase the Home Buyers' Plan withdrawal limit to $35,000.
This would be available for withdrawals made after March 19, 2019.
However, the program sets out certain
conditions for participation. If an individual meets all the
applicable
Home Buyer's Plan
conditions, the withdrawals will not have to be included in his or
her taxable income, and the RRSP issuer will not withhold tax on
these amounts.
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Conditions must be met BEFORE
you
applying to withdraw funds
from your RRSP under the
Home Buyer's Plan:
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You have to be
considered a first-time home buyer.
You
are not considered a first-time home buyer if you or your
spouse or common-law partner owned a home that you occupied as your
principal place of residence beginning January 1 of the fourth year
before the year of withdrawal and ending 31 days before your
withdrawal.
If at
the time of the withdrawal you have a spouse or common-law partner,
it is possible that only one of you will be considered a first-time
homebuyer.
However, if you are a disabled person, or you are buying or building
a home for a related disable person or helping such a person buy or
build a home, you do not have to meet this condition.
●
You have to
enter into a written agreement to buy or build a qualifying
home.
●
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.
●
If you
previously participated in the Home Buyer's Plan, you may be able to do so
again. In this case your Home Buyer's Plan balance on January 1 of the
year of the withdrawal must be zero.
If you participate
in the HBP, certain rules limit
your RRSP deduction for contributions you made to your RRSP
during the 89-day period just before your withdrawal under
the HBP. Under these rules, you
may not be able to deduct all or part of the contributions made
during this period for any year.
For contributions
to be fully deductible that are made to an RRSP in the 89-day
period just before an HBP
withdrawal from that RRSP, the value of that RRSP after the
withdrawal must be at least equal to those contributions
Generally, the Canada Revenue Agency does not allow withdrawing
funds from a locked-in RRSP or LIRA.
It is the financial
institution decision whether it allows early withdrawals from
non-redeemable investments in your RRSP
without penalty.
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Conditions you
have to meet when a withdrawal is made:
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Neither you nor
your spouse or common-law partner can own the qualifying home
more than 30 days before the RRSP withdrawal.
Example
Jackie buys a qualifying home with a closing date of
November 1, 2015.
She must make her request to withdraw funds from her
RRSP under the HBP no later than 30 days after the
closing date. Therefore, Jackie has until December 1,
2015, to file Form T1036 and make her withdrawal under
the HBP.
If she makes a request to participate in the HBP after
December 1, 2015, the withdrawals will not be considered
eligible withdrawals and will have to be included in her
income for the year she receives the funds.
Source: CRA website
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●
You have to be
a resident of Canada.
● You have
to receive all withdrawals in the same calendar year.
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Condition you have to
meet after all your withdrawals have been made:
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Generally, you
have to buy or build the qualifying home before October 1 of the
year after the year of the withdrawal.
To make an eligible
withdrawal under the
Home Buyer's Plan,
you have to use Form T1036, Home Buyers’ Plan (HBP) – Request to
Withdraw Funds from an RRSP. After completing Area 1 of Form
T1036, you give it to your RRSP issuer who will complete Area 2.
Your RRSP issuer will not withhold tax from the funds you withdraw
if you meet the applicable
Home Buyer's Plan
conditions. Your RRSP issuer will send you a T4RSP slip,
Statement of Registered Retirement Savings Plan Income, showing
the amount you withdrew under the
Home Buyer's Plan. You have to attach this slip to
your income tax Return.
Under the
Home Buyer's
Plan,
you have to repay all withdrawals to your RRSPs within a 15-year
period.
Generally, in each year of your repayment period, you
have to repay 1/15th of your original Home Buyers' Plan balance
until the full amount is repaid. Your repayment period starts the
second year following the year that the funds were withdrawn. For
example, if you withdrew funds from your RRSP in July 2003, you must
pay at least 1/15th of the withdrawal in 2005 (or the first 60 days
of 2006). If you do not repay the amount due for a year, it will
have to be included in your income for that year.
You will receive a
Home Buyers’ Plan (HBP) Statement of Account each year with
your Notice of Assessment or Reassessment. This
statement will show the total
Home Buyer's Plan
withdrawals, the amount you have repaid to date, your
Home Buyer's Plan balance,
and the amount you have to repay the following year.
If
you do not buy or build the qualifying home before October 1 of the
year after the year of withdrawal, you can:
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Buy or build a
different home, called a replacement property, before October 1
of the year following the year of the withdrawal or
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Cancel your participation in the
Home Buyer's Plan. When
you cancel your participation in the plan, you must either repay
the RRSP withdrawal in full by the due date or
include any portion you did not repay in your income for the
year you took the money out. Generally, when you cancel your
participation in the HBP, you must repay in full your RRSP
withdrawals by December 31 of the year after the year of the
RRSP withdrawal. For example, if you withdraw funds from your
RRSP in July 2015, you must repay this amount to your RRSP plan
by December 31, 2016. To cancel your participation, you have to
complete the Home Buyers’ Plan (HBP) – Cancellation
form
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