RSP Homebuyers’ Plan

The Government of Canada introduced the first-time homebuyers plan to allow first time purchases with greater access to RRSP funds to purchase or build a home.  The RSP Home Buyers’ Plan withdrawal limit is $25,000 per person presently.  The funds withdrawn from the RRSP must have remained in the plan for a period of at least 90 days prior withdrawal to be eligible under the Home Buyers’ Plan.  If the withdrawal occurred prior to this 90 day period, the withdrawal would not be eligible under the Home Buyers’ Plan.

For a home to qualify under the Home Buyers’ Plan as a “qualifying home,” it must be located in Canada, and can be either single family, duplexes, triplexes, fourplexes or apartments.  In addition, qualifying homes can be semi-detached homes, townhouses, mobile homes and condominiums.  Shares in co-operating housing corporations which provide an equity interest in a housing unit also qualifies under the Home Buyers’ Plan. 

Withdrawals from a RRSP under the Home Buyers’ Plan have to be repaid over a maximum 15 year period.  Repayments have to be made until the Home Buyers’ Plan balance is zero.  Individuals that do not repay the set amount in a given year will have the amount included as income for the taxation year. 

Individuals can make RRSP withdrawals from multiple accounts, assuming the person is the plan owner of each RRSP account.  RRSP issuers will not withhold tax on these withdrawals and they will not be added to the individual’s income for that year. 

When withdrawals are made under the RSP Home Buyers, a Home Buyers’ Plan balanced is created.  This balance represents the total amount of all eligible withdrawals made from the RSPs, minus the amount designated as Home Buyers’ Plan repayments and any amounts included as income as a result of RSP withdrawals under the Home Buyers’ Plan not being repaid. 

Key RSP Home Buyer Plan Points:

  • Eligible withdrawal must be made by the individual buying the home,  spouse or common-law spouse
  • Funds for a related disabled individual can be withdrawn for the purposes of buying a home or building a home. The disabled individual does not have to reside with the individual in the same home
  • Withdraws cannot be more than $25,000
  • Home Buyers’ Plan participation period starts on January 1st of the year you make an eligible withdrawal from a RRSP and ends in the year the Home Buyers’ Plan balance is zero
  • The home must be a considered a “qualifying home”
  • Withdrawals must be repaid over a maximum 15 year period
  • The purchaser must occupy the “qualifying home” as a principal place of residence no later than one year after buying or building it
  • Individuals must be classified as a first-time home buyer
  • To be considered a first time home buyer, individuals or their spouses cannot have owned a home within the previous four years
  • Individuals must be  residents of Canada

There are many other features, conditions and limitations to the Home Buyers’ Plan.  Please visit the appropriate government website for up-to-date information on the Home Buyers’ Plan.

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April 27, 2017

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