RRSP Home Buyersâ€™ Plan (HBP)
The Government of Canadaâ€™s Home Buyersâ€™ Plan allows qualified buyers to withdraw a maximum of $25,000 tax free from their RRSPs to purchase or build a house. If your spouse is also eligible, you can each withdraw up to $25,000 towards the down payment, for a total of $50,000. No income tax is deducted from these funds, as long as they are repaid to the RRSP according to the governmentâ€™s repayment schedule.
How the Plan Works
You may participate in the plan if you (or your spouse) have not owned a home which you occupied as your principal residence in the last five years.
The money you withdraw from your RRSP must be repaid over a period of no more than 15 years to retain its tax deferred status. Your repayment period starts the second year following the year you made your withdrawals. If you pay less than your scheduled annual payments, the amount that you donâ€™t repay must be reported as income on your tax return for that year.
For example, in October 2009 you withdraw $24,000 from your RRSP to finance the purchase of your home. Your first annual repayment of $1,600 ($24,000 divided by 15 years) is due by December 31, 2011.
For more information, go to the Canada Revenue Agency Web site and search for â€œHome Buyers Plan.â€