The Home Buyers’ Plan – here’s how it works

The Home Buyers’ Plan (HBP) is a federal government program created to help first-time home buyers.

The HBP lets qualifying home buyers withdraw up to $25,000 (couples can withdraw up to$50,000) from their RRSPs for a down payment to buy or build a home. Home buyers have up to 15 years to repay their RRSP and home buyers who have repaid their RRSP may be eligible to use the program a second time.

The program has a number of key rule administered by the Canadian Revenue Agency (CRA).

These rules include:

• Home buyers have to enter into a written agreement to buy or build a qualifying home.
• Home buyers have to intend to occupy the qualifying home as a principal residence no later than one year after buying or building it.
• Home buyers have to be considered a first-time buyer.
• The home buyers’ HBP balance on January 1 of the year of the withdrawal has to be zero.
• Neither spouse nor partner can own the qualifying home more than 30 days before the withdrawal is made.
• The home buyer must be a Canadian resident.
• The home buyer has to buy or build the qualifying home before October 1 of the year after the year of the withdrawal.
• RRSP contributions must remain in the RRSP for at least 90 days before you can make a withdrawal under the HBP.

If a home buyer can’t wait 90 days, they have the option of withdrawing $25,000 from their RRSP, paying the tax and then qualifying for a deduction and tax refund.

To read complete information about HBP conditions for participation, go to the Canada Revenue Agency website at www.cra.gc.ca. Enter ‘Home Buyers’ Plan’ in the search box and then select RC4135 - Home Buyers’ Plan (HBP).

To talk to an HBP expert, phone CRA at 1.800.959.8287.