How does the RRSP Home Buyers' Plan work in Canada?

The Home Buyers' Plan (HBP) allows first-time home buyers to withdraw up to C$60,000 from their RRSPs tax-free to purchase or build a qualifying home. This limit was increased from C$35,000 as part of the 2024 federal budget.

Eligibility requirements:

• You must be a first-time home buyer, meaning neither you nor your spouse or common-law partner owned a home that you occupied as a principal residence in the four calendar years before the withdrawal year.
• You must have a written agreement to buy or build a qualifying home.
• You must intend to occupy the home as your principal place of residence within one year of buying or building it.
• The RRSP funds must have been in your account for at least 90 days before withdrawal.
• You must be a Canadian resident at the time of withdrawal and when the home is acquired.

Repayment rules:

• You must repay the full amount back to your RRSP over a 15-year period, starting the second year after the year of withdrawal.
• The minimum annual repayment is 1/15th of the total withdrawn amount.
• If you do not make the required repayment in a given year, that amount is added to your taxable income for that year.
• You can repay more than the minimum in any year to reduce future obligations.

How to withdraw:

Complete Form T1036 (Home Buyers' Plan Request to Withdraw Funds from an RRSP) and submit it to your financial institution. The withdrawal will not be subject to withholding tax.

Tip: Both you and your spouse can each withdraw up to C$60,000 from your respective RRSPs, for a combined total of C$120,000 toward the same qualifying home.