Using your RRSP to buy your first home

Borrow your down payment – from yourself

The Home Buyers' Plan (HBP) allows you, as a first-time home buyer to withdraw up to $60,000 from your RRSP to buy or build a qualifying home for yourself or a disabled relative. You may still be considered a first-time home buyer if you own a rental property or if you haven't owned a home recently.

This is a temporary "loan" from your RRSP. You need to pay it back within 15 years (with a 5-year extended grace period depending on when you took out the funds) or it will be added to your taxable income. You can make withdrawals from more than one RRSP as long as you are the plan owner.  

How the Home Buyers' Plan works

• Allows you to use money in your RRSPs for a down payment on a principal residence.
• You can use up to $60,000, or $120,000 per couple, of your RRSPs toward the purchase as long as the RRPS funds are not coming from a locked-in plan. For example, an RRSP from a pension plan that is inaccessible until age 55 would not qualify.
• You can also use your RRSPs to acquire an accessible or better-suited home for a disabled relative.
• You must meet the government's requirements as a first-time home buyer; this means that you or your spouse haven't owned a home in the last five years.
• Withdrawals are not deemed to be taxable income in the year in which they are withdrawn.
• There is a no-penalty, 15-year payback period for the RRSP money (with a 5-year extended grace period depending on when you took out the funds). Under the terms of the Plan, buyers are required to re-contribute a minimum portion the withdrawal each year, starting two years after the withdrawal was made. You can repay the full amount into your RRSP at any time.
• You can participate in the Home Buyers' Plan even if you have withdrawn funds from your RRSPs under the Lifelong Learning Plan and still have a balance owing.

Make sure you check the fine print

To participate in the Home Buyers' Plan, one of the following conditions must apply:

• You are withdrawing funds to buy or build a home for yourself as a first-time home buyer.
• You are withdrawing funds to buy or build a home for a related disabled person.

In addition, you must meet all of the following criteria:

• You enter into a written agreement to buy or build a qualifying home.
• You intend to occupy the qualifying home as your principal place of residence.
• Your Home Buyers' Plan balance on January 1 of the year of the withdrawal is zero.
• Neither you nor your spouse or common-law partner owns the qualifying home more than 30 days before the withdrawal.
• You are a resident of Canada.
• You buy or build the qualifying home before October 1 of the year following your withdrawal.

You are responsible for making sure that all Home Buyers' Plan conditions that apply to your situation are met. If a condition is not met while you are participating in the plan, your RRSP withdrawal will not be considered eligible. You will have to include the RRSP withdrawal as income on your tax return for the year you received the funds. If you don't meet the conditions for this year, you may still be able to at a later date.

Repaying yourself

• If the minimum annual repayment is not made as scheduled, that amount is included as income for that year.
• Additional repayments may be made if desired; this will result in a smaller outstanding balance and lower scheduled repayments for the rest of the payback period.
• The repayment does not need to be made to the same RRSP from which the original withdrawal was made. You must, however, be the plan holder.
• You cannot direct your repayment to a spousal RRSP.

Talk to us

Your financial advisor can help you with the Home Buyer’s Plan and home ownership strategies in general, including your mortgage. Get in touch by calling us 604.982.8000 (toll-free 1.888.713.6728), send us a message, or visit a local branch.