If you’re a first-time home buyer in Canada, the Home Buyers’ Plan (HBP) can give your savings a boost. This program allows you to withdraw up to $35,000 from your Registered Retirement Savings Plan (RRSP) to buy or build your first home without paying taxes on the withdrawal at the time.

How the Home Buyers’ Plan Works

When you withdraw money under the HBP, it’s essentially an interest-free loan to yourself. You get access to your RRSP funds to help with your home purchase, but you must repay the amount back to your RRSP within 15 years.

• Repayment starts: The second year after you withdraw the funds.

• Annual repayment amount: The total withdrawn divided by 15.

• Miss a repayment? That year’s repayment amount will be added to your taxable income, and you’ll pay income tax on it.

  
  

Example

If you withdraw $30,000, you’ll need to repay $2,000 per year over 15 years. If you fail to make that year’s repayment, that $2,000 is counted as taxable income, potentially increasing your tax bill.

Tips to Avoid Surprise Taxes

• Keep a repayment tracker (spreadsheet or reminder system).

• Make repayments before the deadline in your Notice of Assessment.

• If you’re unsure, consult a Canadian tax professional to stay compliant.

✅ Key Takeaway: The HBP is a valuable tool for first-time home buyers, but missing repayments can lead to unexpected taxes. Plan ahead and stay organized.