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What is Home Buyer’s Plan?

What is Home Buyer’s Plan?

HOME BUYERS’ PLAN (HBP)

This plan allows a tax-payer and his/her spouse or common-law partner to each withdraw up to $25,000 from their RRSP to purchase their first home without having to pay tax on the withdrawal if they meet the following conditions:

• They are first time home buyers (i.e., they have not owned a home in any of the five calendar years beginning before the withdrawal date );

• The home is acquired by September 30 of the year following the withdrawal year;

• They begin or intend to use the home as their principle residence within one year from the date of acquisition; and

• They start repaying the withdrawal to their RRSP of a 15-year period begging in the 2nd year following the year of withdrawal.

Taxpayers having repaid their withdrawal before the beginning of a year may participate in the plan a second time. Taxpayers qualifying for the disability tax credit (or their close relatives) may participate in the plan even if they are not first time home buyers, provided the home acquired is more accessible or better suited for them. Contribution made to an RRSP less then 90 days before the withdrawal under the plan will not be deductible. Any withdrawal under the plan that is not repaid in a timely fashion to the RRSP will become taxable.

For more information on HBPs, see CRA website at the following address: http://www.cra-arc.gc.ca/hbp/.

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