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Real Estate Law

RRSP Home Buyer's Plan

 
 

USING YOUR RRSP FUNDS FOR A HOME PURCHASE 

Under the Home Buyer’s Plan (HBP), a qualified home buyer and his/her spouse (whether married or common-law) may each withdraw up to $25,000 from their respective RRSP Plans. The withdrawn amounts are not included in income and the RRSP issuer will not withhold income tax on these amounts.

Requirement to repay to RRSP over 15 year period

Under the HBP, these withdrawals must be repaid within 15 years. This 15 year period commences in the second year after participating in the HBP. Each year, 1/15 of the total amount withdrawn must be repaid to the RRSP. If in any year, the amount to be repaid is not repaid, the amount not repaid will be included in income for that taxation year. If the amount repaid is greater than is required in any given year, then the balance to be repaid to the RRSP in later years is reduced and the balance to be repaid is divided by the number of years remaining in the repayment period.

Definition of First Time Home Buyer

To qualify under the HBP, you must be considered a first time home buyer meaning that you did not own, either alone or with another person, a home while you occupied it as your principal residence for at least four (4) years immediately prior to participating under the HBP.

Qualifying Home

To qualify under the HBP, you must intend to occupy the home purchased as your principal residence no later than one year after buying it. Once you occupy the home, there is no minium period of time that you have to live there.

How to withdraw RRSP funds for a home purchase

To participate in the HBP, you must complete a Form T1036 and give it to your RRSP issuer.

For more information, you may obtain the Home Buyer’s Plan Booklet from the Revenue Canada office or from their website at www.cra-arc.gc.ca where you may download the Form T1036.

Revenue Canada
333 Laurier Ave. West, Main Floor
Ottawa, ON  K1A 0L9

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