If you are buying a home for the first time in the Ottawa area, you definitely should take advantage of the Home Buyers’ Plan (HBP). With the use of this plan, you may even get more cash to add to your downpayment.
The Home Buyers’ Plan (HBP) is a program offered by the government that allows you to withdraw funds from your registered retirement savings plan (RRSPs) to buy a qualifying home. You can withdraw up to $25,000 in a calendar year (for a combined total of $50,000 if you have a partner) tax-free.
Now, this is part of the strategy to use the HBP and get more money to purchase your first home: if you have some savings for a down payment and you’ve accumulated some RRSP contribution room, open an RRSP. Then you can deposit the money into the plan, wait 90 days, be eligible to participate in the HBP and at the same time, use whatever refund is issued to increase your original down payment amount. Be sure to run this by your tax adviser to ensure it’s a sound strategy for your particular financial circumstances.
Before withdrawing funds under the HBP you must meet the following conditions:
- You have to enter into a written agreement to buy a home.
- You have to intend to occupy the qualifying home as your principal place of residence no later than one year after buying it.
- You have to be considered a first-time home buyer.
- In all cases, your repayable HBP balance on January 1 of the year of the withdrawal has to be zero.
Your RRSP contributions must remain in the RRSP for at least 90 days before you can withdraw them under the HBP, or they may not be deductible for any year.
You will have to repay an amount to your RRSPs each year until your HBP balance is zero (within a period of no more than 15 years). If you do not repay the amount due for a year, it will have to be included in your income for that year.
Please check the CRA website for more information regarding the HBP.
Contact us to begin the process of purchasing your first home. We are happy to help.

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