Home Buyers’ Plan - Spring Time Tips for New Buyers

The funds must be repaid back into the RRSP, over a period not exceeding 15 years, beginning in the second calendar year after the withdrawal. Amounts which are due and not repaid are included in the taxpayer's income under S. 56(1)(h.1) in the year they are due.

The taxpayer and their spouse or common-law partner may each participate in the plan and together withdraw up to $50,000 after January 27, 2009 from their respective RRSPs.

Disabled Persons

For HBP purposes, a disabled person is an individual who qualifies for the disability amount or a person related by blood, marriage, or adoption to a person who is eligible to claim the disability amount for the year of the HBP withdrawal. Disabled persons need not be first-time homebuyers to participate in the HBP.

Qualifying Homes

A qualifying home is a housing unit located in Canada. This includes existing homes and those being constructed. Single-family homes, semi-detached homes, townhouses, mobile homes, condominium units, and apartments in duplexes, triplexes, fourplexes, or apartment buildings, all qualify. A share in a co-operative housing corporation that entitles the taxpayer to possess, and gives the taxpayer an equity interest in, a housing unit located in Canada also qualifies.

Cancelling Participation

If the taxpayer receives the funds from the RRSP but does not buy or build the home (and does not buy or build a replacement home), they may cancel their participation in the plan by contributing the funds back into the RRSP and notifying CRA of the cancellation. CRA provides a form in the Home Buyers' Plan Guide for this purpose. Any amount not recontributed to the RRSP will be considered income in the year received.

Filing Requirements

Members of the Home Buyers' Plan must file a tax return each year until their HBP balance is zero, regardless of whether they are otherwise required to file. Once payments begin, the taxpayer must report on Schedule 7 RRSP Unused Contributions, Transfers, and HBP or LLP Activities each year the amount of RRSP contributions designated as a repayment under the Home Buyers' Plan. These contributions are not considered to be an RRSP contribution and therefore do not require RRSP contribution room and are not deductible. If no contribution is made or the contributions are not designated as a HBP repayment, then the required repayment for the year will be included in the taxpayer's income on line 129.

After the end of the year that the taxpayer turns 71, repayments can no longer be made to the HBP because the taxpayer may no longer contribute to his RRSP. Thus, in the year the taxpayer turns 71, if there is an outstanding HBP balance, the taxpayer must elect to pay the outstanding balance or include in income each year the required annual repayment.

Emigration

If a HBP participant becomes a non-resident, the outstanding balance must be repaid before the return for the year of emigration is filed but no later than 60 days after becoming a non-resident.

Death of Participant

In the year of death, the full outstanding amount under the Home Buyers' Plan must be repaid (or included in income of the taxpayer) unless, at the time of death, the taxpayer had a spouse or common-law partner and that individual elects (under S. 146.01(7)) jointly with the deceased's legal representative (often the same person) to make the payments under the Home Buyers' Plan and have the income inclusion not apply to the deceased taxpayer. This election may be made in the form of a letter attached to the deceased taxpayer's final return.