Home Buyers' Plan
The Home Buyers' Plan (HBP) is a program that allows you to withdraw from your Registered Retirement Savings Plans (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability.
How it works
The Home Buyers' Plan (HBP) allows you to borrow up to $35,000 tax-free. If both you and your spouse qualify, you can each borrow up to $35,000 from your RRSPs, for a total of $70,000.
The maximum amount was increased in the 2019 federal budget from the previous value of $25,000, for withdrawals made after March 19, 2019.[1] Your RRSP contributions must remain in the RRSP for at least 90 days before you can withdraw them under the HBP, or they may not be deductible for any year.[2]
If you buy a home together with your spouse, and both of you qualify for the program, each one can withdraw up to the maximum amount from their own RRSP. A spousal RRSP is eligible for the annuitant (owner), not the contributor.
Repayment rules
The HBP rules require that the funds must be repaid to your RRSP over the next 15 years. It does not matter if the original HBP withdrawal came from a regular RRSP or from a spousal one; the funds must be repaid to a regular RRSP. If you do not repay on schedule, the required amount is added to your taxable income for the year.
Criticisms
Critics of the HBP point out that RRSPs are supposed to help Canadians save and invest for retirement, not buy real estate, and that using your RRSP to buy real estate decreases your overall diversification, as well as hurting your portfolio returns (see Mortgage: HBP).
See also
References
- ^ Budget 2019 Modernizing the Home Buyers' Plan Viewed April 28, 2019
- ^ Home Buyers' Plan (HBP), viewed February 17, 2012.