Home Buyer’s Plan – RRSP

Under the Home Buyer’s Plan (HBP) eligible homeowners can borrow interest free for a period of 15 years from their RRSP towards the down payment of a house. One person can borrow up to $25,000 while a couple can borrow up to $50,000. The home can be a newly constructed home or a resale property. These funds can be used for items related to the purchase including payment of land transfer tax, legal fees or furnishings etc.

  • You must be a first-time home buyer or you and your spouse or common-law-partner must not have owned the property where you lived in the last four years.
  • You must have a written agreement to buy or build a qualifying home.
  • You must be a resident of Canada at the time of the RRSP withdrawal.
  • This property must be your principal residence within a year from closing.
  • You must have a zero repayment balance on the RRSP.
  • Your funds should have stayed in the RRSP for a minimum period of 90 days prior to the purchase.
  • You have to withdraw the RRSP funds within 30 days.
  • Where there are multiple withdrawals, you have to withdraw all RRSP funds in the same calendar year.
Paying back is Easy

The re-payment of funds is easy under the HBP. You get a one year grace period from the date of withdrawal where you do not have to pay. Then you have pay an annual instalment of 1/15th of the total sum withdrawn. If you miss an instalment it is added to your annual taxable income and deducted accordingly. There is no penalty in case you pre-pay the amounts.

To know more about the HBP/RRSP program you can get in touch with our real estate lawyers at 905-405-0199 today.