July 26, 2011
First Time Home Buyers Plan (HBP) Withdrawing Funds From Your RRSP
As a first time home buyer you are eligible to withdraw funds from your RRSP under the Home Buyer’s Plan (HBP)administered by Revenue Canada (CRA). The plan is designed so that your RRSP funds can be drawn, tax-free, for your down payment however there is no requirement that they be used specifically for your down payment.
There are a number of rules and conditions that must be met in order to qualify for the plan and I recommend that you visit the Revenue Canada Agency’s website to make sure that you qualify.
Conditions To Participate
-You have to enter into a written agreement to buy or build a qualifying home for yourself, for a related person with a disability, or to help a related person with a disability buy or build a qualifying home.
-You have to intend to occupy the qualifying home as your principal place of residence no later than one year after buying or building it. If you buy or build a qualifying home for a related person with a disability, or help a related person with a disability buy or build a qualifying home, you must intend that that person occupy the qualifying home as his or her principal place of residence.
-You have to be considered a first-time homebuyer.
-In all cases, your HBP balance on January 1 of the year of the withdrawal has to be zero.
How Much Can I Withdraw?
- You can withdraw $25,000 tax-free from your RRSP under the HBP.
-If you buy with another individual who qualifies as a first time home buyer, each of you can withdraw up to $25,000, totaling $50,000.
-The withdrawal from your RRSP does not need to be included in your income on your annual income tax return, and no tax is taken off the money you withdraw.
What Is The Payback Period?
-You don’t have to start paying back the money into your RRSP until 2 years after the home was purchased.
-You must pay back all withdrawls from your RRSP within 15 years making RRSP deposits each year,,starting the 2nd year following your withdrawal. CRA will determine what your minimum yearl repayment will be and will notify you once you need to start repaying the amount.
-If you don’t pay the amount due in a given year, it is included in to your taxable income for that year you’ll have to pay income tax on this amount.
If you require more information about the HBP or are a first time home buyer looking to demystify mortgage financing please feel free to give me a call. My services are free of charge to you. Email or call 416.461.0240ext2
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I owned a house in 2003 and sold it in 2010. I never lived in the house. My brother in law did. I had withdrawn 12000 for my RRSP for home buyer plan. Do I qualify now for a home buyer plan.
Hey Billie, as far as I understand the rules you wouldn’t be eligible to withdraw again. This is a one time deal and you can only be a first time home buyer once. If you withdrew from your RRSP under the program already you can’t buy your first home again unfortunately. If you would like further info I recommend that you follow up with Revenue Canada Agency. They are actually very easy to get a hold of and I’ve always found them surprisingly helpful despite their bureaucratic nature.
Can you please delete my question from you web. I do not want it on the web. Thanks.