The RRSP (Registered Retirement Savings Plan) Home Buyers' Plan is a government of Canada plan for allowing Canadians to withdraw money, tax free, from their retirement savings plans.

This information is a summary. Current guidelines, expanded details and government forms are available on their website at http://www.ccra-adrc.gc.ca/E/pub/tg/rc4135eq/rc4135eq.html

Formerly restricted to first-time home owners, in 1999 the federal government opened this plan up to some previous home owners, as well as first-time home owners.

A definition of three terms, as they apply to the Home Buyers' Plan.

1. QUALIFYING HOME
   A qualifying home is a housing unit located in Canada. This includes existing homes and those being constructed.
   Single-family homes, semi-detached homes, townhouses, mobile homes, condominium units, and apartments in duplexes, triplexes, fourplexes, or apartment buildings, are all qualifying homes.

2. SPOUSE
   This term applies to a person to whom you are legally married, or with whom you are living common law.
   'Living common law' applies when you live and have a relationship with a person of the opposite sex to whom any of the following applies.

   He or she:

   • has been living common law with you for at least 12 continuous months
   • lived with you previously as your spouse for at least 12 continuous months, and you are living together again
   • is the natural or adoptive parent of your child

   The above includes any period that you were separated for less than 90 days because of a breakdown in the relationship.

3. DISABLED PERSON
   Revenue Canada considers a person to be disabled if one of the following situations applies:
   

   • the person was entitled to the disability deduction on line 316 of the person's return for the year before the Home Buyers' Plan withdrawal, and still meets the eligibility requirements for the disability deduction when the Home Buyers' Plan withdrawal is made.   OR
     
   • if the person was not entitled to the disability deduction for any year before the Home Buyers' Plan withdrawal, a Form T2201, Disability Tax Credit Certificate, certified by a medical doctor or appropriate medical practitioner (i.e., an optometrist, audiologist, psychologist, or occupational therapist), is filed with Revenue Canada for the year of the Home Buyers' Plan withdrawal.

     If Form T2201 is not approved, withdrawals will not be considered eligible under the Home Buyers' Plan and they will have to be included as taxable income for the year.    

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CONDITIONS FOR PARTICIPATING IN THE HOME BUYERS' PLAN

1. WHAT IS THE HOME BUYERS' PLAN?
   • RRSP withdrawals are not included as income...
   • If you withdraw more than $20,000...
   • You must use the money before...
   • If you do not use the money...
   • You must repay within...

2. CONDITIONS FOR PARTICIPATING
   • You have to be a resident of Canada...
   • The property...
   • It must be your principal residence...
   • If you are a first-time home owner...
   • If you are a previous home owner...
   • You cannot own the qualifying home more than 30 days before the withdrawal...

3. RRSP WITHDRAWALS
   • Request to withdraw funds - Form T1036
   • Withdrawals must be in the same year...
   • The RRSP must belong to the participant...
   • You cannot remove funds from some RRSPs'...

4. RRSP WITHDRAWALS FOR DISABLED PERSONS
   • You are the disabled person...
   • You are buying a house for a disabled person who is related...
   • You are giving your RRSP funds to a disabled person who is related...

5. REPAYING YOUR WITHDRAWALS
   • How do you make repayments?
   • Can you repay more than you have to?
   • Can you repay less than you have to?
   • Important notice if declaring bankruptcy...
   • Can you make early repayments?
   • Repayment must be made in less than 15 years if...

6. WHAT HAPPENS IF YOU DO NOT MEET ALL THE CONDITIONS?

7. WHAT CAN YOU USE YOUR WITHDRAWAL OF RRSP FUNDS FOR?

8. CAN YOU PARTICIPATE IN THE LIFELONG LEARNING PLAN AT THE SAME TIME?

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1. WHAT IS THE HOME BUYERS' PLAN?

You can withdraw a single amount or make a series of withdrawals throughout the same year, provided the total of your withdrawals is not more than $20,000

If you buy the qualifying home together with your spouse or other individuals, each person who qualifies can withdraw up to $20,000.

IMPORTANT NOTE:
If you made a contribution to an RRSP during the 89-day period just before your withdrawal from your RRSP, you will not be able to deduct the contribution you made from your taxes.

RRSP WITHDRAWALS ARE NOT INCLUDED AS INCOME...

Under the Home Buyers' Plan you do not have to include eligible withdrawals as income on your income tax return, and your RRSP issuer will not withhold tax on these amounts.

IF YOU WITHDRAW MORE THAN $20,000...

If the total of your RRSP withdrawals under the Home Buyers' Plan is more than $20,000, you will have to include the excess amount as income on your tax return for the year you receive it.

YOU MUST USE THE MONEY BEFORE...

Generally, if you participate in the Home Buyers' Plan in a particular year, you have to buy or build the qualifying home before October 1 of the year following the year of withdrawal.
If you are building a qualifying home, Revenue Canada considers you to have 'built the home' on the date it becomes habitable.

IF YOU DO NOT USE THE MONEY...

If you do not buy or build the qualifying home before October 1 of the year after the year of withdrawal, you can:

• cancel your participation in the Home Buyers' Plan and return the money to an RRSP
        OR
• buy or build a different home, called a replacement property, before October 1 of the year following the year of withdrawal.

YOU MUST REPAY WITHIN...

You must repay all withdrawals to your RRSPs within a period of no more than 15 years. Generally, you will have to repay an amount to your RRSPs each year until you have repaid the total you withdrew. If you do not repay the amount due in a year, you will need to include the amount as income on your tax return for that year.

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2. CONDITIONS FOR PARTICIPATING

YOU HAVE TO BE A RESIDENT OF CANADA...

You have to be a resident of Canada when you receive funds from your RRSPs under the Home Buyers' Plan and up to the time a qualifying home is bought or built. If you are not sure whether you are a resident or non-resident of Canada, or you need more information about residency status, contact your tax services office.

If you become a non-resident after you receive your funds but before a qualifying home is bought or built, you may cancel your participation in the Home Buyers' Plan.

If you become a non-resident after a qualifying home is bought or built, your withdrawal will be considered to be eligible. However, special rules will apply to the repayment of your Home Buyers' Plan balance.

THE PROPERTY...

To withdraw funds from your RRSPs under the Home Buyers' Plan, you must first have entered into a written agreement to buy or build a qualifying home. Obtaining a pre-approved mortgage does not satisfy this condition.

IT MUST BE YOUR PRINCIPAL RESIDENCE...

When you withdraw funds from your RRSPs under the Home Buyers' Plan, you must intend to occupy the qualifying home as your principal place of residence no later than one year after buying or building it. Once you occupy the home, there is no minimum period of time that you must live there.

IF YOU ARE A FIRST-TIME HOME OWNER...

You are considered a first-time home owner if neither you NOR your spouse (including common-law) has ever owned a home that was occupied as your principal residence.

IMPORTANT NOTE:
If you are a first time home-owner and you are about to be married - and your soon-to-be spouse owns his/her principal residence (or did within the previous five years), you will have to withdraw funds from your RRSP PRIOR to your wedding.

IF YOU ARE A PREVIOUS HOME OWNER...

If you previously owned your principal residence, you may be able to use the Home Buyers' Plan again if:

• You did not previously participate in the Home Buyers' Plan
        OR
  Your previous Home Buyers' Plan balance is zero on January 1 of the year during which you plan on making another Home Buyers' Plan withdrawal

        AND
  

• you meet all the other Home Buyers' Plan conditions.

YOU CANNOT OWN THE QUALIFYING HOME MORE THAN 30 DAYS BEFORE THE WITHDRAWAL...

You cannot withdraw an amount from your RRSP under the Home Buyers' Plan if you or your spouse owned the home more than 30 days before the date of your withdrawal.

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3. RRSP WITHDRAWALS

REQUEST TO WITHDRAW FUNDS - FORM T1036

To make an eligible withdrawal under the Home Buyers' Plan, you have to complete Form T1036, Home Buyers' Plan (HBP) for each withdrawal you make. You can get a copy of Form T1036 from your tax services office, or from Revenue Canada's website. http://www.ccra-adrc.gc.ca/formspubs/menu-e.html

Make inquiries to find out how long it will take to withdraw funds from your RRSP and have the money deposited to your account. This can be anywhere from one day to several weeks, and it is better to have the money in your chequing account early.

WITHDRAWALS MUST BE IN THE SAME YEAR...

To participate in the Home Buyers' Plan, you have to receive all the withdrawals from your RRSPs in the same year. However, if you receive an amount from your RRSP in one year and another in January of the following year, Revenue Canada consider the amount received in January of the following year to have been received in the year the first withdrawal was made.

NOTE: If you receive a withdrawal of funds in one year and another after January of the following year, the amount received after January will not be an eligible withdrawal under the Home Buyers' Plan and you will have to include it as income on your tax return.

THE RRSP'S MUST BELONG TO THE PARTICIPANT...

You can only withdraw funds from an RRSP under which you are the participant. If your spouse contributed to your RRSP, you are the participant of the RRSP, even if your spouse deducted the contributions from his or her taxable income.
If you contributed to your spouse's RRSP, your spouse is the participant of the RRSP, even if you have deducted the contributions from your income.

YOU CANNOT REMOVE FUNDS FROM SOME RRSP'S...

You are not allowed to withdraw funds from some RRSP's, such as locked-in or group RRSPs. Your RRSP institution can give you more information about the types of RRSP's that you have and whether or not withdrawals under the Home Buyers' Plan can be made from them.

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4. RRSP WITHDRAWALS FOR DISABLED PERSONS

IMPORTANT NOTE:

If you are withdrawing funds from your RRSPs to buy or build a qualifying home for a related disabled person or to help a related disabled person to buy or build a qualifying home, the disabled person must meet the normal qualifying conditions.

IF YOU ARE THE DISABLED PERSON

If you are a disabled person, you can withdraw funds from your RRSPs under the Home Buyers' Plan to acquire a home that is more accessible, or better suited to your needs.
You must meet the normal qualifying conditions.

IF YOU ARE BUYING A HOUSE FOR A DISABLED PERSON WHO IS RELATED

You can withdraw funds from your RRSPs under the Home Buyers' Plan to acquire a home for a disabled person related to you by blood, marriage, or adoption, that is more accessible to, or better suited to the needs of, that person.   See Note.

IF YOU ARE GIVING YOUR RRSP FUNDS TO A DISABLED PERSON WHO IS RELATED

You can withdraw funds from your RRSPs under the Home Buyers' Plan and give those funds to a disabled person related to you by blood, marriage, or adoption, to acquire a home that is more accessible to, or better suited to the needs of, that person.   See Note.

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5. REPAYING YOUR WITHDRAWALS

Each year Revenue Canada will send you a Home Buyers' Plan (HBP) Statement of Account. This statement will tell you the amount you have repaid, your Home Buyers' Plan balance, and the repayment you have to make for the next year.

HOW DO YOU MAKE REPAYMENTS?

To make a repayment under the Home Buyers' Plan, you have to make contributions to your RRSPs in the year the repayment is due or in the first 60 days of the following year. You can contribute the repayments to a new or existing RRSP account.

Once your contribution is made, you have to designate all or part of the contribution as a repayment under the Home Buyers' Plan. For example if you contribute $4,000 to your RRSP you could designate $1,000 as a repayment to the Home Buyers' Plan, leaving $3,000 as a tax deduction.

To designate your repayment, complete Schedule 7, RRSP Unused Contributions, Transfers, and Home Buyers' Plan or Lifelong Learning Plan Activities (in your tax package), or Form 1037 from Revenue Canada's website (http://www.ccra-adrc.gc.ca), and file it with your return. You have to do this even if you would not otherwise have to file a return for the year.

There are several circumstances that Revenue Canada will not allow as repayments, e.g. contributing to a spousal RRSP. Please check with your local tax services office or Revenue Canada's web site. http://www.ccra-adrc.gc.ca/E/pub/tg/rc4135eq/rc4135eq.html

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CAN YOU REPAY MORE THAN YOU HAVE TO?

If you repay and designate more of your RRSPs to the Home Buyers' Plan than required, the annual amounts to be repaid in later years is reduced.
For example: you borrow $15,000 and you repay $3,000 on the first occasion - the remaining $12,000 will still have to be repaid over 14 years at $857.14 per year, instead of $1,000 per year.

The annual Home Buyers' Plan (HBP) Statement of Account that is sent to you takes into account any additional payments you make and gives you the new repayment amount for the next year.

CAN YOU REPAY LESS THAN YOU HAVE TO?

If you repay less than the minimum amount, you will have to include the difference as income on your tax return.

IMPORTANT NOTE IF DECLARING BANKRUPTCY

On your income tax returns you cannot include as income an amount that is more than your minimum repayment, so even if you declare bankruptcy, you still have to repay to your RRSPs all amounts that you withdrew under the Home Buyers' Plan.

CAN YOU MAKE EARLY REPAYMENTS?

Your repayment period starts the second year following the year you made your withdrawals. You can choose to begin your repayments earlier, but the repayment period will remain the same.
Any payments made before you are required to start your repayments will reduce the actual amount you have to pay in the following years.

REPAYMENT MUST BE MADE IN LESS THAN 15 YEARS IF...

Additional repayment rules apply if an Home Buyers' Plan participant:

• dies
• becomes a non-resident
• is 70 years of age or over.

Please check with your local tax office or Revenue Canada's web site. http://www.ccra-adrc.gc.ca/E/pub/tg/rc4135eq/rc4135eq.html

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6. WHAT HAPPENS IF YOU DO NOT MEET ALL THE CONDITIONS?

You can cancel your participation in the Home Buyers' Plan if you have met all but one of the following Home Buyers' Plan conditions:

• you did not buy or build a qualifying home or replacement property
• you became a non-resident before buying or building a qualifying home or a replacement property

If you cancel your participation because a qualifying home or replacement property was not bought or built, your cancellation payments are due on or before December 31 of the year after the year you received the funds.

If you repay to your RRSPs the full amount you withdrew under the Home Buyers' Plan, you will not be taxed on your withdrawal. Any portion of your withdrawal that is not repaid will have to be included in your income for the year you received the funds.

7. WHAT CAN YOU USE THE FUNDS FOR?

8. CAN YOU PARTICIPATE IN THE LIFELONG LEARNING PLAN AT THE SAME TIME?

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