First Time Home Buyers: Specific to Canada and BC-- Home Buyer's Plan (HBP) by Geraldine Santiago

First time Home Buyers: Specific to Canada and BC

Home Buyer's Plan and Your First Home Purchase by Geraldine Santiago 

The Home Buyer's Plan (HPB) 
RRSPs and Your Down Payment for a First Home Purchase


Did you know that the Home Buyer's Plan (HBP) is a program for first time home buyers allowing them to withdraw up to $25,000 from their registered retirement savings plan (RRSP) to buy or build a qualifying home. (This used to be $20,000)  Withdrawals that meet all applicalbe HBP conditions do not have to be included in your income, and your RRSP issuer will not withhold tax on these amounts.  If you buy the qualifying home together with your spouse or common-law parter, or other individuals, each of you can withdraw up to $25,000.  There are certain conditions that apply, so to be sure, you can call the Canada Customs and Revenue Agency direct at 1-800-959-8281 or visit their website at www.ccra.gc.ca.


How to Make a Homebuyer's Plan Withdrawal

Your withdrawal can only be made AFTER you provide proof of an accepted offer.  You must submit a completed FORM T1036 Home Buyer's Plan request to withdraw funds from an RRSP to your RRSP issuer who will finish the process.

Remember to inform your real estate agent that you plan to use your RRSP to form part of your downpayment, especially if you are planning to use the RRSP money that you just deposited as you may not be able to access the money at the time you need it. Your RRSP contributions must remain in the RRSP for at least 90 days before you can withdraw them under the HBP, or they may not be deductible for any year.  Timing is important in your offer to purchase, so be sure to talk to your real estate agent about this especially if you are purchasing in the beginning of the calendar year.

For more information, you can visit the Canada Customs and Revenue site at www.ccra.gc.ca or call toll-free at 1-800-959-8281. 
To view FORM T1036, go to www.cra-arc.gc.ca/E/pbg/tf/t1036/t1036-09e.pdf

Paying Back a Homebuyers' Plan Withdrawal

The money you withdraw from your RRSP under the Home Buyers Program is considered a LOAN. The money MUST BE REPAID at a prescribed rate into your RRSP within 15 years, but you do not have to begin repayments intno your RRSP for about three years.  It is a good idea to begin paying back this money as soon as you can,s o you may wish to consider opening a Continuous Savings Plan.  It is a simple and convenient way to manage your savings on an ongoing basis.  For more information, visit the Canada Customs and Revenue Agency site at www.ccra.gc.ca or call toll-free at 1-800-959-8281.