The Home Buyers’ Plan (HBP) in Canada is a program that allows you to withdraw funds from your Registered Retirement Savings Plans (RRSPs) to purchase or construct a qualifying home, either for yourself or for a specified disabled person. The key points of this plan include:
Withdrawal Limit
Currently, the HBP withdrawal limit is set at $35,000 per eligible buyer. This has been increased several times over the last 20 years withe the most recent increase to $35,000 in 2019.
Eligibility Criteria
- You must be a resident of Canada at the time of the RRSP withdrawal.
- A written agreement to buy or build a qualifying home is required.
- A qualifying home includes various types of housing units located in Canada.
- If you have previously used the HBP, your HBP balance must be zero at the beginning of the year of your new withdrawal.
- You must intend to occupy the qualifying home as your principal place of residence within a year of its purchase or construction.
- There are specific considerations for first-time homebuyers and individuals with disabilities.
Repayment
The withdrawn amount must be repaid over a 15-year period, starting the second year after the year in which the funds were withdrawn. Read our comprehensive guide on RRSP Home Buyer’s Plan repayment here.
Multiple Withdrawals
You are allowed to make multiple withdrawals from your RRSPs under the HBP within the same calendar year as your first withdrawal, and in January of the following calendar year.
Tax Implications
Withdrawals under the HBP are not taxed as long as they meet the program’s requirements and are repaid within the stipulated timeframe.
Forms and Publications
To participate in the HBP, you must fill out Form T1036, Home Buyers’ Plan (HBP) Request to Withdraw Funds from an RRSP. This form then needs to be presented to the Financial Institution that holds your RRSP in order to withdraw the funds tax free.
The benefits of the Home Buyers’ Plan include the ability to use pre-tax dollars to fund a home purchase, potentially leading to significant tax savings. It also provides a way for first-time homebuyers or those who haven’t owned a home in the recent past to access funds that would otherwise be locked in an RRSP until retirement.
For more detailed information on the Home Buyers’ Plan, including definitions and how to report repayments on your income tax, you can visit the Canada Revenue Agency’s official page on the topic here.