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RRSP Home Buyers' Plan (HBP)
Use Your RRSP to Help Buy or Build a Home
Income Tax Act s. 146.01
The Home Buyers' Plan (HBP) allows you to borrow up to $35,000 from your RRSP to buy or build a qualifying home, if:
 | 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 Buyers' Plan, or |
| 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. The maximum amount was increased to $35,000 by the Federal 2019 Budget, for withdrawals after March 19, 2019. This measure was included in Bill C-97 which received Royal Assent on June 21, 2019.
Note that your RRSP contributions must remain in the RRSP for at least 90 days before you can withdraw them under the Home Buyers' 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Income tax will not be deducted from the amount withdrawn, and the withdrawal amount will not be included in your income.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must be repaid over a maximum of 15 years, starting no later than the second year following the year in which they are withdrawn.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. An RRSP contribution made in the year of the HBP withdrawal, even prior to the HBP withdrawal, can be designated as a repayment of the HBP.
See the article Make sure you report repayments to RRSP Home Buyers' 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 $35,000.
A qualifying home means
| a housing unit located in Canada, or |
| 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. See Important Dates for RRSP, RDSP, HBP and LLP on the Canada Revenue (CRA) website. There are other conditions which must be met in order to qualify for the Home Buyers' 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 Buyers' Plan, including conditions for participating in the HBP.
Home Buyers' Plan and First Home Savings Account
Funds from a Tax-Free First Home Savings Account (FHSA) can be used to help purchase a home for which a Home Buyers' Plan loan is also being used.
Breakdown of a Marriage or Common-Law Partnership
The Federal 2019 Budget announced an extension of access to the HBP after the breakdown of a marriage or common-law partnership. To be eligible, the individual:
| must live separate and apart from the spouse for a period of at least 90 days as a result of a breakdown in their marriage or common-law partnership. |
| begins to live separate and apart from their spouse in the year in which the withdrawal is made or any time in the 4 preceding years. |
| lives separate and apart from their spouse at the time of the withdrawal. |
| cannot be occupying their principal place of residence with a new spouse or common-law partner. |
| must have disposed of their previous principal place of residence no later than 2 years after the end of the year in which the HBP withdrawal is made. This requirement will be waived for individuals buying out the share of the residence owned by the individual's spouse or common-law partner. The existing rule that individuals may not acquire the home more than 30 days before making the withdrawal will be waived in this case. |
| must have an outstanding HBP balance of nil at the beginning of the year in which the withdrawal is made. |
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 Buyers' 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.
What if I withdraw the HBP money, and then don't meet all the conditions?
If you don't meet all the conditions after you have made the HBP withdrawal, your withdrawals will be included in income for the year of the withdrawal. If CRA has already issued a notice of assessment for the year of the withdrawal, they will reassess your return to include the withdrawals. This may be avoided if you are able to cancel your participation.
Home Buyers' Plan Cancellation
If, after withdrawing funds as a Home Buyers' Plan withdrawal, circumstances change and you don't meet all the conditions, you can cancel your participation in the HBP, and you have a limited time to repay the funds. See the CRA information "How do I cancel my participation?". If you have met all the conditions of the HBP, you cannot cancel your participation. You can cancel your participation if you have otherwise met all the conditions, but:
| you did not buy or build a qualifying home or replacement property; or |
| you became a non-resident before buying or building a qualifying home or replacement property. |
If you withdrew funds under the HBP to help a related person with a disability, you can cancel your participation if:
| that person doesn't buy or build a qualifying home or replacement property; or |
| you become a non-resident before that person buys or builds a qualifying home or replacement property. |
If you cancel your participation because a qualifying home or replacement property was not purchased or built, cancellation payments to your RRSP must be made by December 31st of the year after the year you withdrew the funds.
If you cancel your participation because you became a non-resident after you withdrew the funds, the repayment due date will depend on when you became a non-resident:
|
If you became a non-resident before filing a tax return
for the year you withdrew the funds, repay the funds by the earliest of:
| ||||
| If you became a non-resident after filing your tax return for the year you withdrew the funds, you must repay the funds by December 31st of the year after the year of the withdrawal. |
Cancellation payments can be made to any of your RRSPs or to a new RRSP, with any issuer.
Home Buyers' Plan and the Tax Return
If you make a withdrawal from your RRSP for the HBP or LifeLong Learning Program (LLP) in the calendar year, you will be issued a T4RSP showing these withdrawals. Withdrawals in 2023 would be reported on the 2023 income tax return. Both withdrawals from your RRSP and repayments to your RRSP related to the HBP or to the LifeLong Learning Program (LLP) are recorded on Schedule 7 of your tax return. Any payment that you made into your RRSP from January 1, 2023 to March 1, 2024 (in the year or within 60 days after the end of the year) can be designated as a repayment under the HBP or the LLP on the HBP or LLP worksheet of your 2023 tax return. You cannot designate more than the amount of this RRSP contribution.
Note that the payments made:
| from January 1 to March 1, 2023 should have been reported on your 2022 tax return, and |
| from January 1 to March 1, 2024 must be reported on your 2023 tax return |
See the link below for how to correct this if you didn't report in the correct taxation year.
If the minimum required payment amount is not repaid by the due date it must be included in income on line 12900 (line 129 prior to 2019) of your tax return for the year in which it was due. For instance, if you borrowed $15,000 under the HBP from your RRSP in 2020, the first repayment of $1,000 was due in 2023. If this was not repaid, it must be included as income on line 12900 (RRSP income) of your tax return. If you are using a tax return software package, completing this information on the HBP Worksheet will automatically include the amount on line 12900.
Canadian Tax Calculator - HBP and LLP Repayments
If you are using the Canadian Income Tax and RRSP Savings Calculator, payments into your RRSP for the HBP or the LLP should not be entered into the calculator. However, if you have not made the minimum required payment for either the HBP or the LLP, then any shortfall from this amount must be entered as income - this can be entered on the "other income" line.
Lifelong Learning Plan (LLP)
The Lifelong Learning Plan (LLP) allows you to withdraw amounts from your RRSP to finance full-time training or education for you or your spouse or common-law partner. The funds must be repaid over a period of 10 years.
For more information on the Lifelong Learning Plan, see Canada Revenue Agency topic Lifelong Learning Plan (LLP).
TaxTips.ca Articles
Make sure you report repayments to RRSP Home Buyers' Plan
RRSP Contributions Not Reported on Previous Year Tax Return. What Now?!
First-Time Home Buyers' Tax Credit
Canada Revenue Agency Resources
What is the Home Buyers' Plan?
Conditions for participating in the HBP
Important Dates for RRSP, RDSP, HBP and LLP
T1036 - Home Buyers' Plan (HBP) Request to Withdraw Funds from an RRSP
How do I cancel my participation?
Tax Tips:
Take advantage of the Home Buyers' Plan.
Make sure you complete Schedule 7 if you have made repayments to the HBP or LLP, otherwise you lose RRSP deduction room.
Revised: November 21, 2023