Know about the RRSP Home Buyers Plan
The RRSP Home Buyer’s Plan (HBP) is a government program that allows home buyers to withdraw up to $25,000 from their Registered Retirement Saving’s Plan (RRSP) to put towards buying or building a new home.
Before you can withdraw funds, you have to enter into a written agreement that specifies whether you will be buying or building your new home. You also must occupy this space no later than a year after buying or building it.
To take advantage of the RRSP Home Buyer’s Plan, you have to be considered a first-time buyer. You are not a first-time home buyer if you (or your spouse) have owned a home, which you have occupied as your principal place of residence in the past 5 years.
Once those conditions are met, each person can withdraw up to $25,000 tax-free from their RRSP for a new home. Couples, including common-law partners, can withdraw up to $50,000. You will not pay income tax on these amounts as long as these funds are put back into an RRSP in the future.
Existing homeowners can also use the RRSP Home Buyer’s Plan to purchase an accessible home or a home for a disabled dependent relative. The intended individual must qualify for the Disability Tax Credit (DTC) and this home must be more accessible or better suited to the care of this individual.