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RRSP - (HBP) Home buyers plan

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Purchase a home using RRSPs

Bruce Schoenne, RI, AACI, P.App.
Feb 27, 2005 - 6:28:00 PM

Purchase a home using your RRSP

Home Buyers Plan (HBP)

In Canada, if you have money saved up in your RRSP, did you know that the Federal Government permits you to withdraw funds from your account to buy or build a qualifying home?

Here's how it works...

The Home Buyers Plan (HBP) allows first time home buyers to withdraw up to $20,000 (per person) from an RRSP (Registered Retirement Savings Plan) to buy or build a qualifying home for yourself or a relation that is disabled.

You are considered a first time home buyer if you own a rental property or if you have not recently owned a home.

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 during the period beginning January 1 of the fourth year before the year of withdrawal and ending 31 days before your withdrawal.

Only the individual who is entitled to receive payments from the RRSP can withdraw the funds from the RRSP. When you withdraw funds for the Home Buyers Plan (HBP), your RRSP issuer will not withhold the tax.

You are not required to report the withdrawl as income, but you will have to repay the money within 15 years.

There are certain conditions that will apply before you can withdraw funds from your RRSP under the Home Buyers Plan and include the following:

You are withdrawing funds to buy or build a home for yourself or a disabled relative.

Your enter into a written agreement to buy or build a qualifying home.

Your Home Buyers balance on January 1 of the year of the withdrawal is zero.

Neither you nor your spouse or common-law partner owns the qualifying home more than 30 days before the withdrawal.

You are a resident of Canada.

You buy or build the qualifying home before October 1 of the year after the year of withdrawal.

Questions? Talk to one of our Mortgage specialists today. 

Suggested resources:

Mortgage Glossary Ė Donít understand some of the terms used in these articles? Our mortgage glossary provides simple definitions.

Canadian Mortgage Calculator - Calculate mortgage payments, amortization schedules, interest costs and more. The more you play with it, the more youíll see what it can do.

Canada Revenue Agency - Get all the details of the Home Buyers Plan.

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