Home Buyer's Plan

For the Home Buyers' Plan eligibility conditions, go to https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan/participate-home-buyers-plan.html.

Any RRSP contributions withdrawn under the Home Buyers' Plan within 90 days of contribution may be ineligible for the RRSP deduction. The amount of the contributions deemed ineligible can be affected by any increase or decrease in the fair market value of the RRSP assets during the 90 days preceding the withdrawal. This calculation is done at the bottom of the Home Buyer's Plan workchart.

The amount withdrawn from an RRSP for a Home Buyers’ Plan must be repaid over a period of no more than 15 years. The first repayment must be made within 60 days of the end of the second calendar year following the date of withdrawal.

A minimum repayment of 1/15 of the amount withdrawn is required annually beginning no later than 60 days after the second year following the year of the withdrawal. The repayment is made by designating all or a portion of the annual RRSP/PRPP/SPP contributions as the repayment. If this designation is not done, the minimum repayment amount is included in income for the year. The amount designated may exceed the minimum amount.

The portion of the RRSP/PRPP/SPP contributions designated as a repayment will automatically be updated to Form RRSP, RRSP/PRPP/SPP Deduction Worksheet and decrease the amount of RRSP/PRPP contributions otherwise available for deduction.

When the box Automatically designate the RRSP/PRPP/SPP contributions as repayment under the HBP is selected, the RRSP/PRPP/SPP contributions are automatically designated as repayment under the HBP, up to the repayment amount required in the year.

An option in the preparer profiles allows you to select this box for all returns. However, you can modify this choice for a particular return in Form HBP.

If a repayment is required under both the HBP and the LLP and the automatic designation option is selected in for the HBPs and the LLPs, the program will first determine the amount of RRSP/PRPP/SPP contributions that is required under the HBP and will then determine the amount of RRSP/PRPP/SPP contributions that is required as repayment under the LLP.

General rule – If an HBP participant dies, the legal representative has to include the participant’s HBP balance in the participant’s income for the year of death. The amount to be included in a deceased participant’s income for the year of death is equal to the participant’s HBP balance before death less any RRSP/PRPP contributions (made before the participant died) designated as an HBP repayment for the year of death.

HBP election – If, at the time of death, the participant had a spouse or common-law partner who is a resident of Canada, that individual can jointly elect with the deceased participant’s legal representative, to make the repayments under the HBP and to not have the income inclusion rule apply for the deceased participant. The participant’s HBP balance at the time of death less any RRSP/PRPP contributions designated as an HBP repayment for the year of death is treated as if the surviving spouse or common-law partner withdrew it, and it has to be repaid to that individual’s RRSP/PRPP.

Note
If, in the year of death, but before the participant dies, the surviving spouse or common-law partner became a participant, that individual may still withdraw amounts under the HBP (up to the withdrawal limit) from his or her RRSPs in the year. There are no adverse tax consequences to the surviving spouse or common-law partner if, as a result of electing to treat the deceased participant’s HBP balance as his or her own, the new HBP balance exceeds the withdrawal limit.

If at the time of death the participant’s surviving spouse or common-law partner is also a participant and the election described above is made, the surviving spouse’s or common-law partner’s revised HBP balance has to be repaid over the remaining number of years in his or her repayment period.
However, if the surviving spouse or common-law partner was not a participant, the deceased participant’s HBP balance has to be repaid over the same number of years remaining in the participation period of the deceased.

To make a joint election, the surviving spouse or common-law partner and the deceased participant’s legal representative should attach a signed letter to the final return of the deceased. The letter should state that an election is being made to have the surviving spouse or common-law partner continue making repayments under the HBP, and to not have the income inclusion rule apply for the deceased.

Generally, if the surviving spouse or common-law partner was not participating in the HBP, but elects to continue making the repayments of the deceased individual, the surviving spouse or common-law partner would be considered a participant and cannot make any withdrawals under the HBP until the HBP balance is completely repaid and all the other applicable HBP conditions are met.

Note: If the deceased had not made an HBP repayment for the year of death, and the election is made, the annual repayment for that year for the deceased would not be required. The year following the death, Taxprep will roll forward the HBP balance of the deceased participant in the return of the surviving spouse.

The designation must be made on Schedule 7. The amount entered on the Home Buyer's Plan workchart is automatically updated to Form RRSP, RRSP/PRPP/SPP Deduction Worksheet and also on Schedule 7.