Home Buyers' Plan Summarized

When buying or building a home, you and your partner can withdraw up to $20,000 from your RRSP’s. Even if you have owned a home in the past – but not recently - you may still qualify as a first-time buyer.

You are not considered a first time buyer if you or your spouse (including common law) owned a home that you occupied as your principal place of residence during the period beginning January 1 of the fourth year before the year of withdrawals and ending 31 days before your withdrawal.

You must have entered into a written agreement to purchase a qualifying house before applying for the funds.

Funds must have been in the plan for at least 90 days in order to be eligible.

You must intend on occupying the home as your principal residence.

Your HBP balance on January 1 of the year of the withdrawal is zero.

You must be a Canadian resident.

You may use more than one RRSP - for which you are the plan owner - towards your purchase.

Taxes are not withheld on the sum used through the Home Buyers’ Plan.

If your RRSP is “locked-in” it is usually not eligible for use with the Home Buyers’ Plan.

You are given a period of 15 years to repay the amounts taken from your RRSP under the Home Buyers Plan. The repayment starts the second year after the year that the funds were withdrawn. For example, if you withdrew funds from your RRSP in July 2003, you must pay at least 1/15th of the withdrawal in 2005 (or the first 60 days of 2006).

You will have to advise the financial institutions holding your RRSP of your desire to use your RRSP funds under the Home Buyers’ Plan. They will need the address of the property being purchased and a Revenue Canada Form completed in order to obtain the funds without holding taxes back. The amount of time this process takes varies from institution to institution. As such, it is important that you contact your financial institution as quickly as possible.

For more information visit: http://www.cra-arc.gc.ca/E/pub/tg/rc4135/README.html