The Home Buyer's Plan (HBP) is a valuable government program that allows individuals to withdraw up to $35,000 from their Registered Retirement Savings Plan (RRSP) to put toward the purchase or construction of a new home.
Before making a withdrawal, you need to enter into a written agreement specifying whether you'll be buying or building your new home. Additionally, you must intend to occupy the new space as your principal residence within one year after the home is acquired.
To qualify for this program, you must meet the definition of a first-time homebuyer. Specifically, you are not considered a first-time homebuyer if you (or your spouse or common-law partner) owned a home that you occupied as your principal place of residence in the last five years.
Once you meet these criteria, each eligible person can withdraw up to $35,000 tax-free from their RRSP for the purpose of acquiring a new home. For couples, including common-law partners, this means a combined maximum withdrawal of up to $70,000. Importantly, these withdrawals are not subject to income tax as long as the funds are repaid into an RRSP over a specific timeframe.
Furthermore, existing homeowners can also use this program to purchase an accessible home or a home for a disabled dependent relative who qualifies for the Disability Tax Credit (DTC). The new home must be better suited to the care or accessibility needs of the individual.
Please note that government programs and regulations can change over time, so it's essential to verify the current rules with the Canada Revenue Agency (CRA) or seek guidance from a qualified financial advisor or tax professional before making any decisions regarding your RRSP and home purchase.
Real Estate Websites by Web4Realty