RRSP Home Buyers' Plan

When buying your first home, consider the CMHC's RRSP Home Buyer's Plan (HBP) as a possible source for your down payment. It allows participants to withdraw $20,000 from their RRSPs to purchase or build a house. No income tax is deducted from these funds, as long as they are repaid to an RRSP according to the government's repayment schedule.

You may participate in the plan if you or your spouse has not owned a home which you occupied as your principal place of residence in any of the past five calendar years.

Generally, you can only participate in the RRSP Home Buyers' Plan once. Conditions of the HBP include the following:

• The home you purchase must be located in Canada ;
• It must not have been acquired more than 30 days before receiving the withdrawal under the HBP;
• It is intended to be your principal place of residence within one year after buying or building it (that is to say, not as a second home or investment property).

Once you enter into an agreement to buy or build a qualifying home, you may withdraw funds from your RRSPs under the plan. You must acquire the home before October of the year following the year of withdrawal. After entering into the agreement, you must complete Form T1036. You can download and print a copy of the form, or you can complete it online in PDF format. Click here for those options:    http://www.cra-arc.gc.ca

You can also order a printed copy of the form by calling 1-800-959-2221. This form should then be submitted to your RRSP issuer.

Once approved, the form gives you permission to withdraw funds from your RRSP without any taxes being withheld. You may make contributions to the plan from more than one RRSP, as long as the $20,000 limit is not exceeded.

In addition, if you have a spouse who is also eligible, you can each withdraw up to $20,000 towards the down payment, for a total of $40,000. You may withdraw money from your RRSP tax-free if that money was deposited at least 90 days prior to withdrawal.

The money you withdraw from your RRSP must be repaid over a period of not more than 15 years to retain your tax deferred status. If you choose to pay less than your scheduled annual payments, the amount that you don't repay must be reported as income on your tax return for that year.

If you are interested in participating in this plan, a REALTOR® can help you understand how it works and ensure that you maximize its benefits.

For more information on the RRSP Home Buyer's Plan, visit www.cmhc.gc.ca