Your retirement savings could help you get your first home

If you’re a first-time home buyer and you have money in a registered Retirement Savings Plan (RSP), you can tap into these funds to purchase a home under the Canada Revenue Agency’s Home Buyers’ Plan (HBP). Here’s what you need to know

• You and your spouse or common-law partner can each withdraw up to $25,000 from your RSPs if you are residents of Canada.
• You can withdraw the money to buy or build a qualifying home, which you will occupy as your principal residence.
  You must be considered a first-time home buyer (certain exceptions apply). 
• You can make a single withdrawal or a series of withdrawals, provided the full amount is withdrawn within the same calendar year.
• You must withdraw the money from a plan for which you are the annuitant.
• The RSP contribution must be in the RSP for at least 90 days before you can withdraw it under the HBP.
• You cannot have owned the home for more than 30 days before the date you withdraw the funds, and you must purchase the home before October 1 of the year after you make the withdrawal.
• You do not include the withdrawals in your income, and the RSP issuer does not withhold tax.
• Repayment of the funds begins the second year following the year when you made the withdrawals.
• To make a withdrawal, complete Area 1 of form T1036, Home Buyers’ Plan (HBP) — Request to Withdraw Funds from an RRSP. Give the form to the RSP issuer, who will complete Area 2.
• In order to avoid paying tax on the money you withdraw, you must repay the funds into your RSP within 15 years, paying at least 1/15 of the total amount each year. You are not required to pay interest or tax, provided you make at least the minimum repayments.
• You must complete an income tax return each year, starting in the year you make the withdrawal, until the money is repaid.
  If you do not repay the required amount for that year, you will have to include it as income on line 129 of your income tax return.

You can also use the HBP to buy or build a qualifying home for a related person with a disability.

Get more information on the HBP, or print the full Guide, which includes a copy of Form T1036.