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Saving for a House Strategy - Home Buyers’ Plan (HBP)



As prices of real estate rise greatly across the GTA, there is one way to make your home

more affordable. The Home Buyers’ Plan (HBP) lets you use your tax deferred RRSP contributions against the purchase of a house under certain circumstances. This lets you get the immediate tax benefits of an RRSP (lowering your taxable income which often leads to a refund) and you can then use this money to buy your house without an immediate penalty.


The HBP allows the withdrawal of up to $35,000 from an RRSP to purchase a qualifying home. Any funds being used must have been in the RRSP for 90 days prior to the withdrawal and funds in a spousal RRSP also qualify. In most cases, both spouses can use the HBP when a couple (or one of them) is purchasing a home, withdrawing up to $35,000 each or $70,000 in total.


The basic rule is that the HPB is only available if there has been no ownership of a home in

Canada in the current year or the previous four years. This basically disqualifies anyone who

currently lives in a home that they own in Canada from using the plan. Those most likely to

use it are first time home buyers’ or those new to or returning to Canada. An exception is

made for an individual who has gone through a marital breakdown.


Once a withdrawal is made, the taxpayer will have to either repay the HBP withdrawal or pay

tax as if an RRSP withdrawal had been made. No repayment has to be made in the year of

the withdrawals, nor in the first year following the withdrawal. The repayment is based on 1/15th of the amount withdrawn being repaid each year for a 15 year schedule.


The HBP can be a valuable tool from a financial management perspective. It can allow a

taxpayer to save for the planned purchase of a house in a more tax efficient manner. It can

also allow access to a greater amount of down payment for a new home.You’ll be posting loads of engaging content, so be sure to keep your blog organized with Categories that also allow visitors to explore more of what interests them.

“Do you have a specific housing need? What's your dream home? Tell us what you want. We'll help you plan for it to make it happen.
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