What's the HBP?
The Home Buyers' Plan is a government program that lets you borrow from your RRSP tax-free to buy or build your home. You then have 15 years to pay back the amount you withdrew, interest-free.
Are you eligible?
You're eligible if you and your spouse were not the owner-occupants of a principal residence during the year of the RRSP withdrawal and the previous 4 years.
You can use the HBP more than once if you've paid back your previous HBP in full by the deadline.
HBP or FHSA: Which one to choose?
Good news! You don't have to choose between the HBP and the FHSA (tax-free first home savings account). You can use both when buying your first eligible property.
HBP with no RRSP
You can still use the Home Buyers' Plan if you have few savings put aside or you haven't contributed to an RRSP.
Here's how:
- Borrow the amount you need from your caisse, but stay within the maximum RRSP contribution room available to you.
- Deposit that amount in a Desjardins RRSP for at least 90 days.
- Withdraw these non-taxable funds from your RRSP and repay your loan to the caisse.
- Use your income tax refund as a down payment on the purchase of a property.
- You have 15 years to put the money back into your RRSP.
How do you repay the funds you've taken out of your RRSP?
You'll need to repay 1/15 of the amount you withdrew as part of the Home Buyers' Plan into your RRSP every year. These contributions can't be deducted from your taxable income. You must make a payment in the calendar year or in the first 60 days of the following year.
Your repayment period starts the second year after the year when you first withdrew funds from your RRSP for the HBP, except for withdrawals made between January 1, 2022, and December 31, 2025. In that case, you can start repayments no later than 5 years after your withdrawal.
Example
You bought your first home in June 2021. You took advantage of the HBP and withdrew $30,000 from your RRSP.
To declare it on your 2023 income tax return, you must make your first repayment by February 29, 2024.
You'll need to contribute 1/15 of $30,000 ($2,000) into your RRSP every year.
Useful information
The non-reimbursed portion is taxable. You'll need to add it to your income. Your repayment period remains the same even if your contribution exceeds the annual repayment amount. The additional amount will be put toward your balance and deducted from future yearly repayments.
Further reading
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