The Home Buyers Plan (HBP) is a program that allows you to withdraw up to $25,000, per person from each of your RRSP accounts in a calendar year to buy, or build, a qualifying home.
To be eligible for the Home Buyers Plan, the following must be met:
- You must be considered a first-time home buyer.
- You must have a written agreement to buy or build a qualifying home for yourself.
- You must intend to occupy the qualifying home as your principal residence within one year after buying or building it.
To be considered a first-time home buyer, you or your current spouse or common-law partner must not have occupied a home that either of you have owned during the four years preceding the withdrawal.
It should be noted that RRSP contributions must have been in the RRSP for at least 90 days before they can be withdrawn under the Home Buyers Plan. Otherwise, the withdrawal may not be deductible in the year it was withdrawn, and will be included in your income.
RRSP contributions must have been in the RRSP for at least 90 days
Repaying the amount you withdrew
Canada Revenue Agency (CRA) gives up to 15 years to repay the RRSPs that were withdrawn under the Home Buyers Plan. CRA will provide a statement of account on your notice of assessment that will show the amount that you have repaid, the remaining Home Buyers Plan balance and the amount you have to repay into your RRSPs for the following year. Note that if the amount that is owing for the following year is not repaid, the amount will be included in your income for that year.
Home Buyers tax credit
The home buyers tax credit (HBTC) is a non-refundable tax credit for certain home buyers that acquire a qualifying home. The amount of the non-refundable tax credit is $5,000, which is multiplied by the lowest personal income tax rate of $15%, resulting in a credit of $750.
The amount of the non-refundable home buyers tax credit is $5,000
To be eligible for the HBTC, the following must be met:
- You or your spouse or common-law partner must acquire a qualifying home; and
- You did not live in another home owned by you or your spouse or common-law partner in the year of acquisition or in any of the four preceding years.
It should be noted that only one person can claim the $750 credit or it can be shared between you and your spouse/common-law partner, but the total amount cannot exceed the $750.
If you would like more information or have any questions, feel free to contact us at 780.466.6204, or click here to send us an email.
Thanks to Johnny Kwong of KWB Chartered Accountants for providing this content.