Home Buyers' Plan repayments: the schedule, the temporary deferral and what happens if you miss one

The withdrawal, briefly

Each first-time home buyer can withdraw up to $60,000 from their RRSPs under the HBP, so a couple buying together can access up to $120,000. The limit applies to withdrawals made after April 16, 2024; before then it was $35,000. You need a written agreement to buy or build a qualifying home, you must intend to live in it within a year, and you must acquire it before October 1 of the year after the withdrawal. Your institution withholds no tax when you give it form T1036.

Two details trip people up at the withdrawal stage:

• The 90-day rule. A contribution made less than 90 days before the HBP withdrawal may not be deductible. Money that has been in the RRSP for 90 days or more is unaffected.
• Locked-in and group plans. Money in a locked-in RRSP cannot be withdrawn under the HBP, and some group plans restrict withdrawals while you are employed.

For how the HBP fits with the FHSA for the same purchase, see buying a first home with both.

When repayments start

The repayment period is 15 years.

• For withdrawals made before 2022 or from 2026 onward, the first repayment is due in the second year after the year of the withdrawal.
• For withdrawals made from January 1, 2022 to December 31, 2025, a temporary relief measure delays the start to the fifth year after the year of the withdrawal.

Each year you must repay at least one-fifteenth of the total withdrawn, unless you have already repaid more than required. Your Notice of Assessment, and the HBP section of CRA My Account, show the amount due for the coming year and the remaining balance.

How to make a repayment

1. Contribute to any of your RRSPs, or a pooled registered pension plan, during the year or in the first 60 days of the next year.
2. Designate the amount as an HBP repayment on Schedule 7 of your return for the year.

A designated repayment is not deductible, because the withdrawal was never taxed. Contributions you do not designate are treated as ordinary RRSP contributions and deducted as usual. Amounts transferred into your RRSP, such as a retiring allowance or a transfer from a pension plan, cannot be designated as a repayment, and neither can contributions you have already deducted.

You can repay more than the minimum in any year. Extra repayments reduce the balance and lower the minimum for the following years.

If you miss a repayment

If you designate less than the required amount for a year, the shortfall is added to your income for that year and taxed at your marginal rate. It is not a penalty on top of that, and the missed amount no longer needs to be repaid, because it has now been taxed. The rest of the schedule continues unchanged.

Some people choose to skip a repayment in a low-income year, such as a parental leave, because the tax on the shortfall is small. That is legitimate, but the RRSP room used by that amount is gone for good.

Special situations

• Becoming a non-resident: repay the full balance before filing your return for the year you leave, or within 60 days of becoming non-resident if earlier. Otherwise it is added to your income.
• Death: the unpaid balance is included in income on the final return, unless your spouse or common-law partner elects to take over the repayments.
• Turning 71: after the year you turn 71 you can no longer contribute to an RRSP, so each later required repayment is simply included in your income for the year.
• Not buying the home: if the purchase falls through, you can usually cancel your participation by repaying the full amount to your RRSP, or have the withdrawal treated as taxable income. See the CRA’s rules on cancelling HBP participation.