The Home Buyers Plan (HBP) is a federal government program that allows you to withdraw up to $25,000 from your registered retirement savings plans (RRSPs) to buy or build a qualifying home using the funds for a down payment and other cost associated with purchasing.
If you buy the qualifying home together with your spouse or common-law partner, or other individuals, each of you can withdraw up to $25,000 tax-free.
Do you meet the HBP eligibility conditions? (according to Canada.ca)
- You must be considered a first-time home buyer.
- You must have a written agreement to buy or build a qualifying home for yourself.
- You must have a written agreement to buy or build a qualifying home for a related person with a disability or to help a related person with a disability buy or build a qualifying home (obtaining a pre-approved mortgage does not satisfy this condition).
- You must intend to occupy in the qualifying home as your principal place of residence within one year after buying or building it. If you buy or build a qualifying home for a related person with a disability, or help a related person with a disability buy or build a qualifying home, you must intend that that person occupies the qualifying home as his or her principal place of residence.
- Do you meet the RRSP withdrawal conditions?
The funds you use for the HBP program must be repaid back into your RRSPs within 15 years. Otherwise, if you do not repay the amount due for a year, 1/15th of the amount you withdrew will be included in your income for that year. It’s a really good idea to set up automatic withdrawals every month so you don’t have to worry about making sure you contribute enough at tax time.
The funds must be in your RRSP for at least 90 days before they can be withdrawn for a down payment. Make sure you plan accordingly so the funds are in the RRSP for the allotted time.
Following is a complete guide that contains all the information you will need. Also included is the application form.