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RRSPs RRIFs and TFSAs -> RRSP
Home Buyer's Plan
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you or your spouse or common-law partner have not owned a home which you occupied as your principal residence during the four years preceding the withdrawal for the Home Buyer's Plan, or |
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you are buying or building a home for a related disabled person. |
The maximum amount that can be borrowed was increased to $25,000 by the Federal 2009 Budget, which also announced a new First-Time Home Buyers' Tax Credit.
Note that your RRSP contributions must remain in the RRSP for at least 90 days before you can withdraw them under the Home Buyer's Plan, or the contributions may not be deductible for any year. In other words, if RRSP contributions are made in the 89-day period just prior to an HBP withdrawal from the RRSP, the value of the RRSP after the HPB withdrawal must be at least equal to those contributions.
Income tax will not be deducted from the amount withdrawn, and the withdrawal amount will not be included in your income. The funds must be repaid over a maximum of 15 years, starting the second year following the year in which they are withdrawn. Each year that a repayment is due but not paid, the amount due (1/15th of the amount borrowed) will be included in taxable income. See the article Make sure you report repayments to RRSP Home Buyer's Plan! on the Filing Your Return page.
If you buy the home with your spouse, common-law partner, or other individuals, each of you can withdraw up to $25,000.
A qualifying home means
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a housing unit located in Canada, or |
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a share of the capital stock of a cooperative housing corporation, the holder of which is entitled to possession of a housing unit located in Canada |
You must buy or build the qualifying home by October 1 of the year after the year of withdrawal. There are other conditions which must be met in order to qualify for the Home Buyer's Plan, including your intent to occupy the home as your principal residence no later than one year after building or purchasing it. Some conditions must be met before applying to withdraw funds and other conditions must be met when a withdrawal is made. One of the conditions that must be met before applying to withdraw funds is that you have to enter into a written agreement to buy or build a qualifying home. For more information, see the Canada Revenue Agency (CRA) information on the Home Buyer's Plan, including conditions for participating in the HBP.
Can funds be used to buy land on which the qualifying home will be built?The Income Tax Act does not specify that the funds withdrawn must be used to pay for the house that is being built. It specifies that the amount withdrawn must be received as a result of making a written request in a prescribed form. The form is T1036 - Home Buyer's Plan (HBP) Request to Withdraw Funds from an RRSP. The taxpayer must provide the address of the qualifying home being bought or built, and must assert that a written agreement has been entered into for the purchase or building of the qualifying home (not for the purchase of land). If all conditions to participate in the HBP are satisfied, the funds can be used for any purpose. See the topic "Can I use funds withdrawn under the HBP for other purposes?" in the CRA publication RC4135 Home Buyer's Plan Guide. |
Tax Tips:
Take advantage of the Home Buyer's Plan.
Make sure you complete Schedule 7 if you have made repayments to the HBP or LLP, otherwise you lose RRSP deduction room.
Revised: January 28, 2012