Do I Qualify For The RRSP Home Buyers Plan

Are you a first-time homebuyer in Canada struggling with your down payment?

Then you must check out the Home Buyers Plan (HBP) program by the Canadian government.

The Canadian RRSP HBP allows eligible individuals to withdraw up to $35,000 from their RRSP without being taxed, providing a significant boost toward their down payment.

But before you get too excited, it’s essential to determine if you qualify for the HBP.

Make your dream of homeownership a reality – read on to learn more about the HBP eligibility requirements!

Eligibility Requirements For

RRSP Home Buyers Plan

To take advantage of the Home Buyers’ Plan (HBP), you must meet certain eligibility requirements:

Canadian Residency Requirement

You must be a resident of Canada at the time of the withdrawal from your RRSP and intend to occupy the qualifying home as your principal residence within one year of purchase or completion of construction.

First-Time Home Buyer Requirement

To be considered a first-time homebuyer, you or your current spouse or common-law partner must not have owned a home in the four-year period before the date of the HBP withdrawal.

This requirement is waived if you are purchasing a qualifying home for a person with a disability or if you are a participant in the Canadian Forces or the RCMP and have previously owned a home.

Qualifying Home Requirement

The home you purchase or build must meet certain criteria to be considered a qualifying home. It must be located in Canada, and it must be intended to be your primary residence.

Additionally, it must be purchased or constructed before October 1st of the year following the year of the withdrawal.

Repayment Requirement

You must repay the amount you withdrew from your RRSP under the HBP within 15 years.

Repayment begins in the second year after the year of withdrawal, and annual repayments are required until the full amount is repaid.

Besides, if you fail to repay the required amount in any given year, that amount will be included in your taxable income for that year.

So, before you withdraw funds from your RRSP, you need to evaluate your financial condition and meet all the requirements to avoid penalties and take full advantage of the HBP.

How To Determine Your HBP Eligibility?

Here are a few ways to help you determine your eligibility:

Using The Canada Revenue Agency’s (CRA) Online Tool

CRA provides an online tool that helps you quickly determine if you are eligible for the HBP.

For using the tool, you’ll have to provide some basic details like your age, marital status, and how much you have contributed to your RRSP funds.

It will then let you know if you are eligible to buy or build a home using your RRSP funds.

Consulting A Financial Advisor

A financial advisor can guide you on whether or not you meet the eligibility requirements for the HBP.

They can review your financial situation and help you understand how the HBP could benefit you.

If you don’t already have a financial advisor, you can seek out a certified financial planner (CFP) or a mortgage broker who can provide advice on the HBP.

Reviewing The HBP Guide Provided By The CRA

The CRA provides a detailed guide to the HBP on its website.

The guide includes information on the eligibility requirements, how to withdraw funds from your RRSP, and how to repay the amount you withdraw.

Reviewing this guide can help you understand the program’s requirements and determine if you’re eligible for the HBP.

With these methods, you can decide whether or not the HBP is right for you.

FAQs – Do I Qualify For The Home Buyers Plan?

Should I use the Home Buyers Plan?

The Home Buyers Plan (HBP) allows first-time home buyers to withdraw up to $35,000 from their Registered Retirement Savings Plan (RRSP) to use for the down payment on a home.

If you are a first-time homebuyer and do not have enough funds for a down payment, using the HBP can be a good option.

However, consider the impact of withdrawing money from your retirement savings and ensure that you will be able to repay the amount withdrawn within the required time frame.

What is the minimum HBP repayment amount?

For instance, if you withdraw the maximum amount of $35,000, the minimum annual repayment amount would be $2,333.33.

What happens if you don’t pay back your HBP?

Additionally, you will lose the RRSP contribution room that was used to make the original withdrawal.

Who cannot participate in the Home Buyers Plan HBP?

The Home Buyers Plan (HBP) is not available to everyone. The following individuals cannot participate:

Anyone who –

• has already participated in the HBP.
• currently owns a home that they are using as their principal residence.
• is not a Canadian resident.
• has not made contributions to their RRSP for at least 90 days prior to making a withdrawal under the HBP.

Where does the money go when you pay back the home buyers’ plan?

When you make a repayment towards your Home Buyers Plan (HBP) balance, the money goes back into your RRSP.

Does HBP count as income?

No, the amount withdrawn under the Home Buyers Plan (HBP) does not count as income for tax purposes.

Check out our answers to the most common questions regarding the Home Buyers Plan.

Do You Qualify To Withdraw Funds From Your RRSP?

Home Buyers’ Plan (HBP) is a useful program for eligible Canadians who are looking to purchase their first home.

To qualify for the program, you must meet the eligibility criteria like being a resident of Canada, a first-time homebuyer, and you must be purchasing a qualifying home.

Additionally, you must repay the amount you withdraw from your RRSP within 15 years.

You can use the CRA’s online tool, consult with a financial advisor, or review the HBP guide provided by the CRA to determine your eligibility.

Talk to us today and find out whether you qualify for the HBP or not.