The Home Buyers’ Plan is a Canada wide program that allows individuals to withdraw a certain amount from their Registered Retirement Savings Plans (RRSPs) for the purposes of qualifying for a home or if you are planning to help a related person who may have a disability.
Currently, the maximum amount an individual can withdraw from their RRSPs under the Home Buyers’ Plan is $25,000. The Liberal party of Canada has promised to increase this to $35,000 in late 2019. Now, this does not mean that the most a person can withdraw from their RRSPs is $25,000. It just means the most you can withdraw tax free is $25,000 for the purchase or construction of a home.
There are 2 main conditions you will need to meet if you plan on using the Home Buyers Plan for the purchase of your own home:
1.) First-Time Home Buyer
You are considered a first-time home buyer if, in the four-year period, you did not occupy a home that you or your current spouse or common-law partner owned.
The four-year period begins on January 1st of the fourth year before the year you withdraw funds.
Example- if you withdraw funds March 19, 2019, the four-year period begins on January 1, 2015 and ends on February 28, 2019.
2.) Are You Buying or Building a Qualifying Home
You are if you buy or build it, or are considered as buying or building it, before October 1st of the year after the year of the withdraw. Also, that you buy or build it, alone or with one or more individuals.
The RRSPs you withdraw will also need to be repaid. Repayment starts the second year after the year you withdrew funds for the Home Buyers Plan. You will have 15 years to completely repay the entire amount you withdrew and the amount is calculated by the Canadian Revenue Agency and posted to your CRA Account.
To find out more information on how to withdraw funds as well as determine whether or not you qualify, you can visit their site here.