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:

• You are withdrawing funds to buy or build a home for yourself as a first-time home buyer
  
  or
• You are withdrawing funds to buy or build a home for a person with a disability

In addition, all of the following conditions must apply:

• You must enter into a written agreement (Offer of purchase) to buy or build a qualifying home. The agreement may be with a builder or contractor, or with a realtor or private seller.
• You intend to occupy the qualifying home as your principal place of residence. Your repayable HBP balance on January 1 of the year of the withdrawal is zero. Neither you nor your spouse or common-law partner owns the qualifying home more than 30 days before the withdrawal. You are a resident of Canada. You buy or build the qualifying home before October 1 of the year after the year of withdrawal.

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.

C.When do you make a repayment?

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).