The Homebuyers Plan Helps Turn Your Dream into Reality
Dreaming of Buying your First Home?
The Home Buyers’ Plan enables you to make a tax-free withdrawal from your RRSP to buy or build a qualifying first home, then pay it back over 15 years.
What you need to know about the Home Buyers' Plan
Eligibility
To be eligible for the Home Buyers’ Plan, you must be a first-time home buyer and enter into a written agreement to buy or build a qualifying Canadian home. This home must be your principal residence.
Tax-free withdrawal
You can withdraw up to $35,000 from your RRSP to help finance your first home purchase. These funds are withdrawn tax-free.
Repayment
Home Buyers’ Plan funds must be paid back to your RRSP account in annual minimum amounts over 15 years. Most home buyers pay back 1/15 of the original withdrawn amount each year.
RRSP or real estate?
By withdrawing funds from your RRSP through the Home Buyers’ Plan, you are forgoing the investment income and related tax-deferred compounding of that income during the time that this money would have been in your RRSP. This doesn’t necessarily mean that withdrawing funds to buy a home is a poor strategy, as the funds you use from your RRSP may actually be worth more if the value of your home increases.
FAQ
Five questions and answers about the Home Buyers' Plan
Yes. In fact, any two people – not just spouses – can do so to purchase the same home, as long as it is the principal residence for both.
You are not eligible to use the Home Buyers’ Plan if you’ve previously owned a home, or lived in a home owned by your spouse, in any of the five calendar years before the time you want to make a Home Buyers’ Plan withdrawal.
If you don’t make the repayment, the amount is included as income for that year and you’ll have to pay tax on the amount.
A Home Buyers’ Plan Statement of Account is included with your annual Canada Revenue Agency notice of assessment.
Yes. Even if you’re not eligible to contribute to your RRSP based on your income, you must still designate an RRSP contribution as repayment of the annual minimum amount under the Home Buyers’ Plan.
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This article is a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.
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