The Home Buyers’ Plan allows you to withdraw up to a maximum of $25,000 from your Registered Retirement Savings Plan (RRSP) to help finance your down payment. If you are purchasing it with a spouse, a partner, a friend, or someone else, you can each access up $25,000 from your individual RRSPs. Withdrawals for this express purpose are not taxable as long as you meet your annual repayment obligations and the full amount withdrawn is paid back within 15 years.
In order to participate in the Home Buyers’ Plan there are a host of conditions that need to be satisfied. Most importantly, you must be a first-time home buyer and a resident of Canada at the time of the withdrawal. Like the Home Buyers’ Amount, you are deemed a first-time home buyer if you, or whomever else you are buying the home with, have never owned and lived in a primary residence in any of the four preceding years.
On top of that, other important qualifying criteria include:
- You must have a signed agreement in place to buy or build a qualifying home;
- The RRSP amount you are borrowing must be in your account for a minimum of 90 days prior to the withdrawal;
- You must intend to occupy the home as your primary residence within one year of the purchase; and
- You cannot have owned the home for more than 30 days before the RRSP withdrawal.
Of course, there are exceptions to the first-time buyer rule. If you are already a homeowner and you have a disability, or if you are related to a person with a disability, you can still withdraw funds from your RRSP under the HBP. However, eligibility hinges on the following conditions:
- You or your disabled relative must qualify for the Disability Tax Credit;
- The new home is better suited to the care and needs of the person with a disability; and
- If you are not disabled, the disabled relative must occupy the home as a principal residence no later than one year after its purchase.
The rules governing the Home Buyers’ Plan are strict. If you would like more information on how the HBP or other affiliated RRSP programs like the Lifelong Learning Plan, feel free to contact GB Pilley & Associates Ltd., Chartered Professional Accountants at 604 926 3522.