The federal Home Buyers’ Plan (HBP) allows first-time buyers to withdraw up to $60,000 CAD tax-free from their RRSP. You must repay this amount over a 15-year period. If you miss a mandatory annual repayment, the CRA permanently adds that amount to your taxable income for the year, and you lose that RRSP room forever.
Purchasing a home in Canada is a monumental milestone, whether you are bidding on a condo in Toronto, Ontario or buying a family property in Edmonton, Alberta. 🔑 To help Canadians break into the housing market, the federal government offers the Home Buyers’ Plan (HBP). As of recent federal budget updates active in June 2026, eligible first-time homebuyers can withdraw up to $60,000 from their Registered Retirement Savings Plan (RRSP) completely tax-free to use towards a down payment. If you are buying with a spouse, you can withdraw a combined $120,000.
However, the HBP is not free money; it is effectively an interest-free loan from your future self. The Canada Revenue Agency (CRA) mandates that you repay the exact amount you withdrew back into your RRSP over a 15-year period. Navigating the repayment schedule can be tricky. Most applicants are unaware that failing to designate a repayment correctly at tax time leads to an immediate increase in their income tax bill.
Step-by-Step Process in Canada
Whether you live in Saskatoon, Saskatchewan or Victoria, British Columbia, HBP repayments are handled entirely through your annual federal tax return. 📝 You do not send a separate cheque to the CRA; you simply direct funds back into your own retirement account.
Step 1: Locate Your Annual Repayment Amount
Your repayment schedule officially begins in the fifth year after the year you withdrew the funds, as the federal government has extended the temporary five-year grace period to all HBP withdrawals made on or before December 31, 2028. To find out exactly how much you owe this year, check your most recent CRA Notice of Assessment (NOA) or log into your CRA My Account online. The CRA divides your remaining balance by the number of years left in your 15-year repayment period.
Step 2: Make an RRSP Contribution
To make an HBP repayment, you must deposit money into any of your personal RRSPs. 💰 You can contribute to the same RRSP you withdrew from, or a completely new one. These contributions must be made during the tax year in question, or within the first 60 days of the following year (usually by March 1st). Note that contributions made to a Spousal RRSP cannot be used to repay your personal HBP balance.
Step 3: Complete Schedule 7 on Your Tax Return
Depositing the money into your RRSP is only half the battle. When filing your taxes in the spring, you must complete CRA Schedule 7 (RRSP and PRPP Contributions and Transfers). On this form, you must explicitly designate a portion of your total RRSP contributions as an HBP repayment. If you skip this step, the CRA will treat the deposit as a regular tax-deductible contribution, and you will be penalized for missing your HBP payment.
Step 4: Monitor Your Ongoing Balance
After filing, review your new Notice of Assessment. 📊 The CRA will update your HBP statement, showing the payment you just made and recalculating the remaining balance. If you ever choose to pay more than the minimum required amount in a given year, your future annual minimum payments will decrease accordingly.
How Much Does it Cost in Canada?
There are no direct administrative fees for participating in the HBP, but missing a payment has severe tax consequences. 💵 Here is a look at the financial impacts in Canadian dollars (CAD):
| Scenario | Financial Impact (CAD) | Description |
|---|---|---|
| Meeting Minimum Payment | $0 Penalty | You simply move your own money from a chequing account back to your RRSP. No tax is owed. |
| Missed Minimum Payment | Taxed at Marginal Rate | If your payment was $4,000, that $4,000 is added to your T1 income. You pay tax based on your bracket. |
| Accountant (CPA) Filing | $150 – $400 | Standard fee to have a professional file your tax return and properly fill out Schedule 7. |
How Long Does the Process Take?
The Home Buyers’ Plan is a long-term commitment. ⏳ You generally have 15 years to repay the full balance. You can choose to pay it off faster at any time without penalty. If you do not repay the annual minimum, the CRA treats the shortfall as RRSP income for that year. Crucially, once a missed payment is added to your income, that RRSP contribution room is destroyed forever-you cannot go back and repay it later.
Frequently Asked Questions (FAQ)
What happens if I sell the house before the 15 years are up?
Selling the home does not cancel the HBP. You still have to continue making your annual minimum repayments to your RRSP until the balance is zero, regardless of who owns the property.
What happens to my HBP if I declare bankruptcy?
If you file for bankruptcy in Canada, your HBP balance is not discharged. You must continue making your annual RRSP repayments, or the unpaid amounts will continue to be added to your taxable income each year.
Can I use my employer’s RRSP matching program to repay my HBP?
Yes. As long as the funds are deposited into an RRSP in your name, you can designate those contributions (including employer matches) as an HBP repayment on Schedule 7 of your tax return.
What if I die before paying off the HBP balance?
Generally, if you pass away with an outstanding HBP balance, the entire remaining amount is added to your final tax return as taxable income. However, a surviving spouse can sometimes elect to take over the repayments.
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