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(March 2, 2024)

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Canada’s RRSP Home Buyer Plan (HBP) is one of the most common sources from which Canadians withdraw funds to secure their down payment on a new home. If you are considering taking advantage of this program, here are the key points to be aware of:

funds held within an RRSP are allowed to grow tax-free, but once you begin withdrawing the funds they are taxable as per your personal marginal income tax rate in the year you made the withdrawal. However, under the RRSP Home Buyer Plan, you can access the funds tax-free, provided you use the funds for the purchase of a property in Canada!
Although you do not pay taxes on the funds, you are required to pay it back over 15 years with the first payment starting in the second year after the year when you made your first withdrawal from your RRSP under the HBP program. For example, let’s say you withdrew $35,000 from your RRSP and used it as a down payment on a home that was scheduled to close/complete on Dec 1, 2024. Your first scheduled loan repayment would begin on Dec 1, 2026.
What are the repayment terms of the withdrawal? At least 1/15 of the borrowed amount must be re-contributed every year.
What happens if you don’t pay the withdrawal back after 15 years? Any portion of the withdrawal that is remaining after the due date will be declared as personal income in your tax return for the year in which the deadline occurs.
The maximum amount that you are allowed to withdraw from your RRSP under the HBP is $35,000 per applicant (as of the date that this article was published). For example, if you are purchasing a property with your spouse, you would each be able to access $35,000 from your RRSP towards the down payment for a total of $70,000.
You must move into the property within one year of purchasing it
a property is considered eligible under the HBP as long as your intent was to move into and reside in the subject property at the time it was purchased. If you resided in the property, but later moved out of it and retained it as a rental property, the 15-year loan period and tax privileges would carry on
Many people think that the HBP is restricted only to “First Time Home Buyers”, but that is not the case. Although the program was initially designed to accommodate to first time home buyers, it can also be used for repeat buyers provided they fulfill the following “first-time home buyer” criteria:
- If, during the current calendar year before the withdrawal (excluding the 30 days immediately preceding the withdrawal) or within the previous four calendar years, you have not resided in a qualifying home (or a property that would qualify if located in Canada) as your main residence, either solely owned by you, jointly-owned by you, your current spouse, or common-law partner (at the time of the withdrawal), you will be classified as a first-time homebuyer. For instance, if you’re withdrawing funds on July 31, 2024, you must not have lived in a home as your primary residence, whether owned solely by you or jointly with your spouse or common-law partner, between January 1, 2020, and June 30, 2024.

For direct correspondence with the Government of Canada regarding the Home Buyer Plan (HBP), call 1-800-959-8281.

Do you have any questions about the RRSP Home Buyer Plan? Call or text Marko Gelo right now at 604-800-9593, or Click Here to schedule a free, no-obligation phone call with Marko. You can also call Marko on WhatsApp.

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