Sunday, October 10, 2010

Home Buyers' Plan

Home Buyers’ Plan (HBP) is a program that allows you to withdraw $25K from your RRSP to buy or build a qualifying home for you or disabled person.
You will not be allowed to withdraw under HBP from the following
  1. Registered Retirement Income Fund (RRIF)
  2. Spousal RRSP where you are the contributor (annuitant can withdraw under HBP)
  3. Locked-in RRSP, Life Income Fund or Locked-in Retirement Income Fund
A. Conditions:
To participate in the HBP, one of the following conditions must apply:
In addition, all of the following conditions must apply:
B. How to withdraw the money?
If you meet above conditons, complete area A of  T1036  form and submit your form to your RRSP provider. They will process your HBP withdrawal.
You can withdraw a single amount or make a series of withdrawals throughout the same year and January of the following year, as long as the total of your withdrawals is not more than $25,000. If you buy the home with your spouse or common-law partner, or other individuals, each individual can withdraw up to $25,000 from his or her RRSP, provided each of you meet the HBP conditions.

Your first repayment is due the second year following the year in which you made your withdrawals.
Each year, CRA will send you a statement of account with your notice of assessment or notice of reassessment. The statement will include:
  • the amount you have repaid (including any additional payments);
  • your balance for the HBP; and
  • the amount of the next repayment you should make.
You have up to 15 years to repay the amount that you withdrew under the HBP. Generally, for each year of your repayment period, you have to repay 1/15 of the total amount you withdrew until the full amount is repaid to your RRSPs.
For example, if you withdrew funds from your RRSP in July 2009, you must pay at least 1/15th of the withdrawal in 2011 (or the first 60 days of 2012). 

No comments: