RRSP Home Buyers Plan

• What is it?

  • The Home Buyers Plan allows a first-time home buyer to withdraw funds from his or her RRSPs to buy a qualifying home.

• What is a qualifying home?

  • A housing unit located in Canada that will be acquired before October 1, of the calendar year after the year of withdrawal, and will be occupied as a principal residence no later than one year after being acquired. Existing and new homes are eligible.

• Who Qualifies as a first-time buyer?

  • You are eligible for a Home Buyers Plan if you and your spouse have not owned a home as a principal residence at any time during the year you make the RRSP withdrawal and the four preceding years. You may participate in the plan more than once, as long as you have totally repaid your previous withdrawal before the start of the year of re-participation and respected the five year period of not having owned a principal residence. Since 1999, disabled persons can participate without having to qualify as a first-time home buyer.

• How much can I withdraw?

  • You and your spouse or common-law partner can borrow up to $25,000 each from your RRSP. The three year attribution rule on withdrawals from spousal RRSPs does not apply to Home Buyers Plans withdrawals.

• How is the money paid back?

  • You must repay the money to your RRSP over a 15 year period, beginning the second calendar year after the withdrawal. You have to repay at least 1/15 of the withdrawn amount each year. If you pay less, the amount you do not repay is included as income on your tax return for that year. If you pay more, the amount you owe will be reduced resulting in lower annual repayments in subsequent years. Each year, you will receive a statement from the Canada Customs and Revenue Agency telling you what you owe.

• Does the withdrawal affect RRSP contributions made in the same year?

  • You can deduct RRSP contributions made in the same year as the Home Buyers Plan withdrawal on the condition that they were made at least 90 days before the withdrawal.