 |
Ilenna Tai's
Real Estate Knowledge Center: |
|
RRSP Home
Buyers' Plan
The Home Buyers' Plan (HBP) is
a program under which you can, generally, withdraw up to $20,000 from your
retirement savings plan (RRSPs) to buy or build a qualifying home. Withdrawals
that meet all applicable HBP conditions do not have to be included in your
income, and your RRSP issuer will not withhold tax on these amounts. However,
before you can withdraw funds you must have entered into a written agreement
to buy or build a qualifying home which you must occupy no later than one
year after buying or building the home.
If you buy the qualifying home
together with your spouse or other individuals, each of you can withdraw
up to $20,000. You cannot withdraw an amount from your RRSP under the HBP
if you or your spouse owned the home more than 30 days before the date of
your withdrawal.
Details
- Up to $20,000 per person could
be withdrawn tax-free from RRSPs to buy or build a principal residence.
Couples -- including common-law -- will be able to withdraw up to $40,000.
- You have to meet the first-time
buyer's condition. You are not considered a first-time home buyer if you
or your spouse owned a home that you occupied as your principal place of
residence in the past 5 years. To determine past 5 years, the 4 years preceding
the year you make your withdrawal plus the period in the year you make your
withdrawal ending 31 days before your withdrawal is the rule adopted.
- Home buyers withdrawing funds
do not have to pay income tax on the amount withdrawn, as long as the funds
are repaid into an RRSP in the future.
- The 15-year repayment period
will begin in the second calendar year following the calendar year in which
the withdrawal is made. In addition, a qualifying home must generally be
acquired before October 1 of the calendar year following the year of withdrawal.
For example, those making withdrawals under the plan in 2000 will have until
October 1, 2001 to acquire a qualifying home and their first annual repayment
will be due by the end of 2002 or the first two months of 2003.
- A special rule denies a tax
deduction for contributions to an RRSP that are withdrawn within 90 days
of the RRSP deposit being made. Consequently, to get the normal tax break
for a contribution and to use those funds under the plan, the money must
be in your RRSP for at least 90 days before a withdrawal is made.
You can participate in the HBP
more than once if:
- your HBP balance for your previous
participation is zero on January 1 of the year you want your new participation
in the HBP to occur; and
- you meet the first-time buyer's
condition and all other HBP conditions that apply to your situation.
Existing homeowners
can use the HBP to purchase a more accessible home or a home for a disabled
dependent relative where the individual withdrawing the funds:
- qualifies for the disability
tax credit (DTC) and is buying a home that is more accessible for the individual
or is better suited for the care of the individual;
- is related to a disabled individual
who qualifies for the DTC and is buying a home for the benefit of the disabled
individual that is more accessible for, or better suited for, the care of
the disabled individual, or;
- is related to a disabled individual
who qualifies for the DTC and is withdrawing an amount for the disabled
individual to buy a home that is more accessible for, or better suited for,
the care of the disabled individual.
Click here to See how to participate in the program, and learn what forms to use
For more information call 1-800-959-8281
or visit Revenue Canada's web site at http://www.cra-arc.gc.ca/tax/individuals/topics/rrsp/hbp/menu-e.html
Return to ILENNA's site
|