Home Buyer's Plan

The only savings vehicle for many Canadians is their RRSP. In light of this, the government allows first time home buyers to effectively borrow from themselves via their RRSPs using the Home Buyers’ Plan. Here’s a quick review of the Home Buyers Plan (HBP):

  • Available for the purchase of a principal residence

  • $25,000 maximum

  • Spouses each have a $25,000 limit, so a combined

  • $50,000 could be available

  • Money has to be in the RRSP for at least 90 days

  • HBP withdrawal can be no later than 30 days after the closing date

  • Must be repaid over 15 years, usually 1/15th of the withdrawal annually

  • Clients report this repayment when they do their taxes

  • The repayment period starts the second year after the year of withdrawal

  • HBP must be wound up by the end of the year a person turns 71. Any outstanding loan balance at that time will be deemed to be income and therefore taxable

  • If an HBP participant dies and has a surviving spouse, the spouse can assume responsibility for the repayment of the HBP

  • If an HBP participant dies and has no spouse, the estate has to include the participant's HBP balance in the participant's income for the year of death

  • An HBP can be used more than once by an individual provided they have not owned a principal residence for a period of 5 years

And, if you need more information, here’s a link to the CRA’s HBP website. I hope to see you at our next Money Monday, March 26th when RBC and La Capitale will be presenting. Take care, Scott Edgington Director, Investment Sales Qualified Financial Services Inc. scott.edgington@qfscanada.com