Home Buyers' Plan (HBP)
Quick Definition
Allows first-time buyers to withdraw up to $35,000 from their RRSP tax-free for a home purchase.
Full Explanation
The Home Buyers' Plan (HBP) allows first-time homebuyers in Canada to withdraw up to $35,000 from their RRSP to use as a down payment on a qualifying home, without triggering income tax on the withdrawal. If you have a spouse or partner who also qualifies as a first-time buyer, they can also withdraw up to $35,000, for a combined $70,000. The withdrawn amount must be repaid to the RRSP over 15 years, starting 2 years after the withdrawal year. If repayments are missed, the amount is added to your taxable income for that year.
Related Terms
RRSP (Registered Retirement Savings Plan)
A tax-deferred savings account for retirement, with deductible contributions.
Down Payment
The upfront cash you pay toward a home purchase, expressed as a percentage of purchase price.
First-Time Home Buyer
A buyer who has not owned a home in the last 4 years, qualifying for special programs.
Mortgage
A secured loan used to purchase real estate, with the property as collateral.
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