Home Buyers' Plan - Downpayments from your RRSP

This is a brief overview of the Home Buyers' Plan which allows qualifying purchasers to withdraw up to $25,000 from their RRSP to buy or build a qualifying home. If you have the funds available outside of your RRSP, and have yet to make a contribution, you would be well advised to contribute an amount to your RSP before using the funds as a down payment. This will allow you to receive the maximum taxable benefit for the year, and you have considerable time to pay it back. Please consult your tax advisor for the latest details of this beneficial program.

You must be a resident of Canada and intend to occupy the home as your principal residence within one year of acquiring it.

You must be considered a first-time home buyer. You are not considered a first-time home buyer if at any time during the last five years, you or your spouse (includes common-law) owned a home that you occupied as your principal residence.

You must have entered into a written agreement to buy or build a 'qualifying home' before the request to withdraw funds.

Criteria for Withdrawal

Funds must be withdrawn before December 31st. In some cases a second withdrawal may be deemed to have been withdrawn in the current year if it was requested before December 31st and received no later than January 31st.

RRSP funds must be in the plan for at least 89 days to be eligible for withdrawal under the HBP.

Acquisition of the home must not be more than 30 days before receiving the withdrawal.

The maximum withdrawal is $25,000 per qualifying person (i.e. husband $25,000, wife $25,000).

Payback Obligations

Funds must be repaid to the RRSP over a period of no more than 15 years. For example, a withdrawal of $15,000 must be paid back at a minimum of $1,000 annually until the full proceeds have been repaid into the plan. The first payment is due no later than March 1st of the following year.

How to withdraw

You should contact the financial institution holding your RRSP. They will require a copy of your offer, and the name and phone number of your REALTOR. They'll then have you complete a Revenue Canada form to obtain funds without a tax holdback. As various institutions differ in the length of time it takes to withdraw funds, you should contact your financial institution well in advance of when funds will be required to determine how long the withdrawal process will take. A reminder, all funds being withdrawn under this plan MUST be withdrawn in the SAME calendar year.

Check with your nearest Revenue Canada Office for the most up-to-date changes to this program.