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Using RRSP Money For First Time Home Buyers


Blog by Tridac Mortgage | August 3rd, 2011


As a first time home buyer you are eligible to withdraw funds from your RRSP under the Home Buyer’s Plan (HBP) administered by Revenue Canada (CRA). The plan is designed so that your RRSP funds can be drawn, tax-free, for your down payment.

There are a number of rules and conditions that must be met in order to qualify for the plan. Visit the Revenue Canada Agency’s website to make sure that you qualify.

Conditions To Participate

You have to enter into a written agreement to buy or build a qualifying home for yourself, for a related person with a disability, or to help a related person with a disability buy or build a qualifying home.

You have to intend to occupy the qualifying home as your principal place of residence no later than one year after buying or building it. If you buy or build a qualifying home for a related person with a disability, or help a related person with a disability buy or build a qualifying home, you must intend that that person occupy the qualifying home as his or her principal place of residence.

You have to be considered a first-time homebuyer.

In all cases, your HBP balance on January 1 of the year of the withdrawal has to be zero.

How Much Can I Withdraw?

You can withdraw $25,000 tax-free from your RRSP under the HBP.

If you buy with another individual who qualifies as a first time home buyer, each of you can withdraw up to $25,000, totaling $50,000.

The withdrawal from your RRSP does not need to be included in your income on your annual income tax return, and no tax is taken off the money you withdraw.

What Is The Payback Period?

You don’t have to start paying back the money into your RRSP until 2 years after the home was purchased.

You must pay back all withdrawls from your RRSP within 15 years making RRSP deposits each year, starting the 2nd year following your withdrawal. CRA will determine what your minimum yearly repayment will be and will notify you once you need to start repaying the amount.

If you don’t pay the amount due in a given year, it is included in to your taxable income for that year you’ll have to pay income tax on this amount.

If you require more information about the HBP or if you're a first time home buyer looking to demystify mortgage financing please feel free to call us. Our services are free of charge to you. No pressure. Never any obligation. We're here to help you. Email or call 416.461.0240.