The Home Buyers’ Plan (HBP)

What’s a HBP?

A HBP stands for Home Buyers’ Plan. A HBP allows you to withdraw funds from your RRSPs to buy or build a property.

To be able to use funds from an RRSP to by a property, these funds must remain in the RRSP account for a period of at least 90 days. When you withdraw money from an RRSP for a HBP, no tax needs to be paid for this withdrawal.

Who qualifies for an HBP?

To qualify, one cannot have owned a home in the last 4 years.

How much can I withdraw from RRSPs?

The maximum amount for withdrawal is $35,000 per person. For a couple buying a property, they can withdraw up to $70,000 from their RRSPs.

How does the repayment of the HBP work?

Repayment of the HBP starts 2 years after the funds have been withdrawn. When the repayment starts, you must repay a minimum of 1/15^th, each year, of the funds that have been originally withdrawn.

FAQs

What happens if I don’t repay back the minimum amount required (1/15^th annually)?

If you decide to skip a repayment for a given year, the minimum amount will be added to your income for that year (which means you will be taxed on that amount)

What if I have a locked-in RRSP (e.g., LIRA)?

Most of the time, a locked-in RRSP does not qualify for a Home Buyers’ Plan.

Can you use your employer’s RRSP contribution match to count towards paying back the HBP?

Usually, yes.

Can I start paying back earlier?

Yes, you can pay back earlier. Any repayment that you make will reduce that amounts of payments that will be due.

Does repaying back affects my RRSP contribution room?

No