Buying your first home is one of the largest financial decisions you will ever make, and the Canadian government provides a powerful tool to help you get there faster. The Home Buyers Plan (HBP) allows qualifying first-time home buyers to withdraw up to $60,000 from their Registered Retirement Savings Plan (RRSP) completely tax-free to put toward purchasing or building a qualifying home. The amount withdrawn under the HBP is not included in your income for the year of withdrawal, making it one of the most valuable tax strategies available to Canadians entering the housing market.
The Home Buyers Plan is a federal program administered by the Canada Revenue Agency (CRA) that lets eligible Canadians temporarily "borrow" from their own RRSP savings without triggering the income inclusion that would normally apply to RRSP withdrawals. The withdrawn funds go toward the purchase or construction of a qualifying home, and you repay the amount back into your RRSP over time rather than paying tax on it. Because the withdrawal is not included in your taxable income, you keep the full benefit of your RRSP deduction from when the money was originally contributed.
A qualifying home is a housing unit located in Canada that you intend to occupy as your principal place of residence no later than one year after buying or building it. This includes single-family homes, condominiums, townhouses, mobile homes, and even shares in a co-operative housing corporation.
The CRA defines a first-time home buyer for HBP purposes in a specific way that catches many people off guard. You must not have owned a home that you used as your principal residence at any time during the four calendar years before the year of your HBP withdrawal. In practical terms, this means if your last qualifying home was sold or ceased to be your principal residence before January 1, 2021, you could potentially qualify for an HBP withdrawal in 2025.
There is an important exception for individuals who are separated or divorced. If you have lived separate and apart from your spouse or common-law partner for at least 90 days due to a breakdown of the relationship, you may be able to participate in the HBP even if you owned a home together during the four-year window, provided you are not living in that home at the time of the withdrawal. This rule recognises the financial reality many newly single Canadians face when re-entering the housing market.
The 2024 federal Budget increased the HBP withdrawal limit from $35,000 to $60,000, effective for withdrawals made after April 16, 2024. This is a significant enhancement to the program and meaningfully increases the amount of tax-sheltered savings you can access for a down payment.
If you are purchasing a home with a spouse or common-law partner who also qualifies under the HBP, each of you can withdraw up to $60,000 from your respective RRSPs, creating a combined maximum of $120,000 available toward your home purchase. This combined amount can make a substantial difference in reducing or eliminating mortgage default insurance premiums under CMHC rules.
One critical requirement: the funds you withdraw must have been sitting in your RRSP for at least 90 days before the withdrawal date. Contributions made within 90 days of the withdrawal cannot be used for HBP purposes. This rule is designed to prevent individuals from making a last-minute RRSP contribution solely to immediately withdraw it under the HBP. Plan your contributions well in advance of your anticipated purchase timeline.
To initiate a withdrawal under the Home Buyers Plan, you must complete Form T1028, Request to Make a Withdrawal from an RRSP Under the Home Buyers' Plan, and provide it to your RRSP issuer (your bank, credit union, insurance company, or investment firm). Your issuer will then release the funds without withholding tax.
You are not required to make a single lump-sum withdrawal. You can make multiple withdrawals in the same calendar year from one or more RRSPs, provided your total withdrawals do not exceed the $60,000 lifetime HBP limit. You must also have a written agreement to buy or build a qualifying home before you make your first withdrawal. This agreement can be a signed purchase contract, a construction agreement, or a builder contract — it must be in writing and in place prior to October 1 of the year after the year of withdrawal.
The HBP is structured as a 15-year repayment plan, not a gift. You must repay the full amount you withdrew back into your RRSP, and your repayment period begins in the second calendar year after the year you made your first HBP withdrawal.
Your minimum annual repayment is calculated as one-fifteenth of the total amount withdrawn. For example, if you withdraw $60,000 in 2025, your repayment period starts with your 2027 tax year. Your minimum annual repayment would be $60,000 ÷ 15 = $4,000 per year, for 15 consecutive years. You can always repay more than the minimum in any given year, which reduces your future obligations and gets your retirement savings back on track sooner.
Repayments are made as RRSP contributions designated as HBP repayments on Schedule 7 of your personal income tax return. These repayments do not generate an additional RRSP deduction — you are simply returning money you already deducted when you originally contributed to the RRSP.
Missing your minimum annual repayment has real tax consequences that compound over time. If you fail to make your required repayment for a given year, the missed amount is added to your income for that year and taxed at your marginal rate. You permanently lose the RRSP contribution room that would have been restored had you made the repayment. The CRA tracks your outstanding HBP balance and will reflect missed repayments on your Notice of Assessment each year, so there is no way to overlook this obligation unintentionally.
If your income increases significantly in future years, missing repayments becomes even more costly. Staying on top of your annual HBP repayments is something the team at Swift Accounting Calgary recommends treating with the same priority as any other mandatory tax obligation.
Since 2023, Canadians have been able to take advantage of the First Home Savings Account (FHSA) in addition to the HBP — and use both for the same home purchase. This is one of the most powerful home-buying tax combinations available to Canadians today.
The FHSA allows contributions of up to $8,000 per year (lifetime maximum $40,000) that are fully deductible, and qualifying withdrawals are completely tax-free. Unlike RRSP withdrawals under the HBP, FHSA withdrawals do not need to be repaid. The FHSA is not considered an RRSP for HBP purposes, so opening and using an FHSA does not affect your HBP eligibility or limit.
The optimal sequencing strategy is to exhaust your FHSA balance first — since those withdrawals never need to be repaid — and then use your HBP withdrawal from your RRSP to top up any remaining down payment shortfall. This approach maximises the amount of permanently tax-free money going toward your home while minimising the repayment obligation you carry forward.
Yes, it is possible to use the Home Buyers Plan more than once in your lifetime. To qualify for a second HBP withdrawal, two conditions must both be met: your first HBP balance must be fully repaid (a $0 balance on your CRA account), and you must meet the first-time home buyer definition again at the time of the new withdrawal. This means you must not have owned a home used as your principal residence in the four calendar years preceding the new withdrawal. Individuals who sell a home, rent for several years, and later choose to purchase again may find themselves eligible for a repeat HBP.
Navigating the HBP rules — especially around repayment tracking, FHSA coordination, and repeat eligibility — is exactly where working with an experienced Calgary accounting firm makes a tangible difference to your financial outcome.
Ready to make the most of your Home Buyers Plan? Contact Swift Accounting today to speak with a Calgary accountant who can walk you through your RRSP balances, FHSA strategy, and repayment schedule before you sign any purchase agreement.
Yes. The first-time home buyer requirement under the HBP looks back only four calendar years before the year of your withdrawal. If you have not owned a home that was your principal residence at any point during that four-year window, you qualify — regardless of what you owned before that period. Many Canadians who previously owned homes are surprised to discover they are eligible again.
No, you are not required to withdraw the full $60,000. You can withdraw any amount up to the limit, and you can do so in multiple withdrawals within the same calendar year. If your RRSP balance is less than $60,000, you simply withdraw what is available (subject to the 90-day seasoning rule). Your repayment obligation will be based on the actual amount you withdrew, not the maximum limit.
If you become a non-resident of Canada, you generally must repay your entire outstanding HBP balance by the earlier of 60 days after you become a non-resident, or April 30 of the year following the year you became a non-resident. Any unpaid balance at that point is included in your income for the year of departure. In the event of death, the full outstanding HBP balance is included in the deceased's income on their final return, unless a surviving spouse or common-law partner elects to take over the repayment obligation.
No. HBP repayments are designated on Schedule 7 of your tax return as repayments, not as new RRSP contributions. They do not generate an additional RRSP deduction, and they do not reduce your available RRSP contribution room. The repayment simply restores money that was already in your RRSP before the withdrawal — you received your deduction when you originally contributed those funds years earlier.
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