What it is
Normally, money you take out of an RRSP is taxed as income. The Home Buyers' Plan, or HBP, is an exception: you can take out up to $60,000 to buy or build a qualifying home, tax-free, and put it back into your RRSP over time.
It's a loan from yourself, not a grant. Anything you don't pay back on schedule becomes taxable income.
Who can use it
You need to be a first-time home buyer. For the HBP, that means you didn't live in a home you owned in the four calendar years before the withdrawal, or in the current year before the withdrawal (not counting the 30 days just before it). A home your current spouse or common-law partner owned in that period counts too.
You also need a written agreement to buy or build the home, and you must intend to live in it.
The deadlines
- Money you put into your RRSP in the 89 days before the withdrawal may not be deductible.
- You must buy or build the home before October 1 of the year after the year of your first withdrawal.
Paying it back
You have 15 years to put the money back into your RRSP. Each year, the CRA tells you the minimum on your notice of assessment, usually one fifteenth of what's left.
When the 15 years start depends on when you first took money out:
- Before 2022: repayments start in the second year after the withdrawal.
- From 2022 through 2025: repayments start in the fifth year after the withdrawal.
- From 2026 through 2028: the federal government has announced the same fifth-year start. Check canada.ca for its status before you rely on it.
If you pay back less than the minimum in a year, the difference is added to your income for that year and taxed.
The HBP and the FHSA
The HBP comes out of an RRSP and has to be paid back. A qualifying FHSA withdrawal doesn't. Kova explains how the HBP works, but it doesn't suggest a withdrawal.