Home Buyer’s Plan (HBP)

HBP

The HBP allows prospective buyers to withdraw their RRSPs without being taxed. Two options are available:

1) Withdraw your current RRSPs Maximum of $25 000.00 per borrower
2) Borrow on unused RRSPs to increase your tax return

Withdrawing an RRSP

Very simple. You withdraw current RRSPs without being taxed. Each person can withdraw up to 25,000 $. F.T.Q.and or RRSPs are admissible provided that all other regular RRSPs have been used.

Borrowing for RRSPs

You can borrow on unused RRSPs (refer to your notice of assessment) to benefit from a more substantial tax return. To do so, you borrow an amount, for example 10 000 $, which is deposited in an RRSP during 90 days, during which you will pay interest. After that time, you withdraw the 10 000 $ to reimburse your personal loan. You are considered as having taken 10 000 $ of RRSP that you will ultimately apply as a deduction on your income taxes. This adds up to a greater tax refund.

In each case, you will need to reimburse your RRSP withdrawals. A little time is granted during the first two years, after which, the government will indicate on your Notice of Assessments the minimum required to refund in the next taxation year on a 15-year period.

A Few General Rules:

  • To have access to the HBP, you must not have been an owner-occupant during the past 5 years
  • You can participate to the HBP more than once in a lifetime, provided you have fully reimbursed your previous RRSP withdrawals
  • You cannot NOTARIZE during the 60 days following your RRSP withdrawal
  • You cannot withdraw an RRSP in two separate years since the 2nd becomes taxable. However, if the second is withdrawn in the month of January, it will be considered as having been withdrawn in the same year as the first, and thus not taxable.

Several other rules govern the HBP program. For more information, contact our consultants.

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