Considering how often they’re used, there is a lot of confusion over what a Home Buyers Plan withdrawal really does and how it works.
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Q: I have almost finished repaying my Home Buyers’ Plan (HBP). What happens when that is done? Where is my money?
A: The HBP withdrawal you made in order to purchase your home was a loan you took out from your own RRSP. But that loan has rules.
The main rule is that you have to pay it back in a specific timeframe in order to avoid penalties, which you have been doing.
RRSPs are a way of deferring or delaying income tax, presumably until you retire. In normal situations, any time you put money into an RRSP, you don’t pay income tax on it in that year, giving rise to the tax savings. However that deferral ends when you take the money back out of the RRSP. At that point you pay income tax on the withdrawal as if it’s newly-earned income.
HBP withdrawals are exceptions to this rule: the government lets you take the money out (recall this is money you previously stashed in your RRSPs and hence have never paid income tax on) and continues deferring the income tax on it — but only for a time. You will pay income tax on it if you wait too long to put the money back in your RRSP.
The repayment schedule you have been following as you make your HBP repayments is designed to ensure that the money goes back in before the deferral expires — in other words, fast enough that the withdrawal doesn’t get taxed.
Once you’re paid up, you can once again start adding to your RRSP without some or all of it going to repay your HBP. The advantage is that now you can get the full RRSP tax deferral on your contributions from here on in.
For example:
Let’s say your HBP repayment is $500 per year, and you have $1,000 per year to put in your RRSP. So long as you are still repaying your HBP, the first $500 of your contribution goes to HBP repayment, and the other $500 can be used to get a tax deduction/deferral.
Once your HBP is paid off, the full $1,000 can be used to get a tax deduction/deferral.
Thinking of buying your first home and using the HBP?
You might also be interested in:
How a little fancy footwork with your RRSPs can save you thousands — painlessly
Is the money I paid for HBP goes back to my RRSP account?
Yes. In fact, the only way to ‘pay back’ into your Home Buyers Plan is to make a (re)contribution to your RRSP, then designate it as an HBP repayment when you file your taxes.
If you did not buy any rrsp’s and used a few for HBP in 2001 and have now paid back thru your income tax the amount for 15 years does it mean the rrsp is now clear and can be used/cashed?
Yes. In fact RRSPs can be withdrawn at any time. BUT don’t forget that every time you make a withdrawal from your RRSPs that’s not done under the HBP or the similar Lifelong Learning Plan, the withdrawal gets taxed as if it’s new income. The bank will usually withhold a percentage of the withdrawal right away, but even that is only an estimated amount (the rate is set by law). When you file your income taxes the withdrawn amounts will be added to your income for tax purposes, and the withheld amounts will be credited to you as a prepayment of your taxes.
I really appreciate your input as I don’t have a lot of people to talk to about the issue. Very impressed at your turnaround time in your reply and wonder if you have any people in Vancouver that work for you?
Hi, no, we don’t have a Vancouver branch yet! But we do long-distance tax preparation through email, courier, phone and/or skype 🙂
I was repaying HBP every year on your taxes as income and didn’t file taxes for the last four years. When I did file I submitted 2020 taxes before your 2017,2018 & 2019. They changed my return from one payment to include the final 4. So does this mean I don’t have to claim it on 2017,2018 & 2019 taxes I’m going to do.
Filing one tax year when there are missing ones that are older tends to make a mess of the calculations on CRA’s end. The only thing you need to get right is the ‘required repayment amount’ for each year, which can shift around in situations like this, and it’s virtually impossible to calculate this figure on your own, and impossible to file your return electronically if you don’t. However there is a solution, and that is to have CRA look up the answer, specific to you.
Call CRA’s Individual Tax line at 1-800-959-8281, and follow the prompts to speak to an agent. Tell them you’re filing old returns and you need to know the actual repayment amounts required to enter on that return. The first agent you speak to usually won’t know the answer, so you’ll be passed up the line to someone more knowledgeable. Let that person guide you, because you kind of have to follow a process here so that the return will function properly.
As always when calling CRA about your own account, have your most recently filed return handy when you make the call, as you’ll have to provide data from it to verify your identity and get access to your personal tax information.
Great article. Thank you for posting. Once the HBP is repaid, where do you see and access these RRSPs? I’ve been paying them according the schedule, but I don’t have access to them or their growth in the mean time.
Hi Rachel,
You can access all RRSPs, including ones that have been paid back via the HBP, by making a withdrawal and paying income tax on it as with normal RRSP withdrawals. If your RRSPs are invested and are growing, that growth is part of what is available to you to be withdrawn. Of course, most people try to leave their RRSPs invested and growing tax-free as long as possible, until they are obliged to start withdrawing them via a Registered Retirement Income Fund (RRIF) when they have retired.
Hi,
I’m almost done paying back my home buyers loan amount I withdrew from my RRSP. Once that’s done, how can I get access to my RRSP info/details again? This RRSP was set up thru a former employer group plan, but ever since it was all put into a home buyers loan (almost 10 yrs ago), I haven’t received any notices/account updates about the RRSP itself. How can I access the funds in that RRSP once this home buyer loan/RRSP pay backs are done?
Hi Diana. Remember that where you withdrew your Home Buyers’ Plan withdrawal from has nothing at all to do with where you put your repayments back at all, other than the fact that they’re both RRSP accounts.
The only way to repay a Home Buyers’ Plan withdrawal is by making RRSP contributions. You can make them to any RRSP, and that’s where the repayments are sitting. Your former employer presumably does not have control over the RRSP into which you are making your repayments, as you are doing that yourself, now. If all the funds in the employer’s RRSP were subsequently withdrawn back out as a HBP withdrawal, logically there’s nothing in that old RRSP fund waiting for you, which is why you never hear about it.
How do I know when my HBP is paid back in full? I don’t see them in my online banking info.
The HBP runs more or less automatically through your tax returns with no interaction with your bank at all, the only way to see how much is left on the account is by referring to your Notice of Assessment, checking on MyAccount, or calling CRA to ask.
It’s confusing, but the HBP doesn’t get ‘paid back’ exactly; it just disappears, whether you pay in or not, over the course of the 15-year repayment period. During that period the HBP system is affecting your tax return each year, either by swallowing up an amount of your RRSP contributions equal to the ‘required repayment’ for that year, or by showing up as additional taxable income (for example, in a year where you didn’t make any RRSP contributions, or didn’t make enough to cover the ‘required repayment’). Either way, your HBP account basically takes care of itself mathematically on your tax return; all you need to do is decide whether you want to make an RRSP contribution or just accept the taxable income in any given year.
How do we find out which bNk our rrsp was in? Is there a number I can call to get that info?
Do you mean to make your repayment? You don’t need to know what RRSP you withdrew from. You can make your repayment by contributing to any RRSP, even a brand new one.
Thank you for this article Sunny. I am still quite confused. I am close to paying off my Home Buyers Plan (HBP). Where is the money I have been using to pay the HBP? Besides the RRSP accounts, where could the money be? I contacted my bank inquiring about the RRSP account I used for HBP, but says, the account is inactive.
So where is the money? Thank you Sunny
Hi Ron. The short answer: the money you used to repay your HBP is in your RRSPs. There is no other place.
When you took out your HBP funds, they were withdrawn from your RRSPs (wherever they were being held), essentially as a loan. But unlike regular loans, where you borrow from one place and must return the funds to the same place, in the case of the HBP you borrow from any RRSP, and pay back to any RRSP. Wherever you’ve been making RRSP contributions, that’s where your HBP repayments are.
Hi Im still very confussed about the hbp. Years ago I borrowed 12,000 from my rrsp to buy my first home. I have about 800 more dollars to pay back and then I will owe 0 dollars. So does this mean I will have 12000 dollars put back into my rsp?? I was under the assumption that I was borrowing from my own money.
If you make all your required HBP repayments (by way of RRSP contributions) of $800/year for 15 years, you will have put $12,000 back into your RRSPs.
In order to make a repayment to the HBP, you first make a contribution to your RRSPs, then designate that contribution as a HBP repayment. For example, if you had a required repayment of $800/year, and you made a $1,000 RRSP contribution each year, $800 of that gets designated as a repayment to the HBP. Designating it as a repayment doesn’t change where that money landed. It was contributed (back) to your RRSP, and that’s where it stays.
In other words, you have already put funds back into your RRSP via your contributions during the repayment period.
Good Morning,
I will have paid off the HBP in it’s entirety this year. Will the Money be transferred back into my RRSP account that I have with my bank? There isn’t really any clarity as to where to find the funds once paid off.
Congratulations! If you have been actively paying back your HBP, you have done so by making RRSP contributions and then designating them as repayments. In that case, the RRSP contributions are there in your RRSP, as always. The alternative way deal with your HPB is to do nothing (no RRSP contributions), in which case you don’t replace the RRSPs you withdrew to purchase your house. Instead of actually repaying the withdrawal, you end up paying income tax on the amount you withdrew, albeit gradually over the course of 15 years. In that case, there is no more obligation to the HBP, but money that was withdrawn from your RRSP was never replaced, so of course it’s not there.
I’m repaying my HBP currently. I make monthly contributions.
If I withdraw $ from this RRSP (I know it’s taxed) to pay some debt. Will it affect my repayment plan at all?
Hi Mike. No, your withdrawal from your RRSP that is going to be taxed is completely separate from your HBP withdrawal and responsibilities.
Also be aware that if you do not make the ‘required repayment’ to the HBP by making an RRSP contribution, the unmade contribution will also trigger some additional taxable income. For example, if you have a required repayment amount of $1,000 for the current year and you don’t make that repayment (in the form of a contribution to your RRSP), that $1,000 will show up as additional taxable income on your next tax return. Essentially, an unmade repayment is treated as an additional withdrawal from your RRSP.
awesome, thanks for the info!
Where does my RRSP go after repayment under the HBP. Does it go back to my bank account?
The only way to make repayments to the HBP is to make contributions to your RRSP. So if you made the repayments, the money is (back) in your RRSP. However, if you didn’t make the repayments, that means that you never put any money back anywhere. You have no more obligations to the HBP after 15 years whether you make the repayments or not, but if you didn’t make the repayments, the money is gone.
I think you are miss understanding everyone’s question. I and most are not putting money into our rrsp account. When we file taxes we pay the money into HBP directly without rrsp contribution. We are asking where is this money?
I’m afraid what you’re saying doesn’t make sense. You CANNOT repay the HBP if you don’t put money into an RRSP account. There is no such thing as ‘repaying the HBP directly’ that bypasses RRSPs.
The HBP is a program, not an account. You took the money for your downpayment not from an HBP, but via the HBP from your RRSPs. Therefore the only way to repay that withdrawal (from your RRSP) is by putting money back into…your RRSPs. And if you do so — repay your HBP by putting money into an RRSP — then that’s where the money is: in the RRSP where you put it.
Hi I missed repaying the HBP & cra added as an income inclusion in my tax return every year. If I will not pay the HBP & opted to include it as income inclusion, do I still owe them after 15 years?
In addition, is the income inclusion means repayment of my HBP, does it mean i have money in my rrsp?
No, you do not owe anything on your HBP after the 15 year repayment period, regardless of you made the required repayments or not. By taking the income inclusions instead, you essentially opted to pay income tax on the HBP withdrawal instead of returning the money to your RRSP. For that reason, no, the HBP withdrawal is not back in your RRSP. Note that if you were also making RRSP contributions during the repayment period, those are in your RRSP.
HI, I closed my RRSP account where I borrowed HBP but still paying it. What will happened after I repay it? Where will it go? Will it be deposited to the other RRSP account?
The only way to ‘repay’ your home buyers plan is to make RRSP contributions. Doesn’t have to be the same account, but it has to be to an RRSP account of some kind. So wherever you’re making those contributions, that’s where the money is going.
Thank you so much! I learned a lot reading your replies to questions!
I understand that part of.my annual rrsp contributions will go to hbp reoayments, is there a possibility of owing tax at the end of the year since repayments will not be credited as new contributions? What happens if i die while on hbp repayments?
First question: yes, it is possible to owe tax at the end of the year because some of your RRSP contributions are getting ‘used up’ by your required HBP repayment. Be aware, however, that it’s always possible to owe tax at the end of the year. If your income from all sources triggers more tax than has already been prepaid (through instalments and/or tax withholding by your employers), you will always have to pay the difference. Reduced RRSP contributions make it more likely, but they aren’t the only factor.
Second question: While I certainly hope you don’t pass away while still making HBP repayments — hopefully you will live a long time past that 15-year period! — most likely the remaining unpaid portions of the HBP will be added as income to your final return, and your estate will be taxed on that amount.
I have a small business, If I pay myself a bonus out of the corporation directly to my RRSP, could this also be considered a repayment? eg. If I pay myself a $5000 bonus directly into the RRSP, can I mark that as a repayment? or does it have to come from after-tax income?
Yes, any contribution to your RRSP can be designated as a HBP repayment, regardless of the source of the funds. But be aware that in the situation you’re describing you would be taxed on the $5,000 payment, and if you use the RRSP contribution to pay down your HBP, it cannot be used to lower your taxes.
Remember that if your corporation pays you an amount, even if that amount is placed directly into your RRSP, it’s still considered income for you, and it still gets declared on your personal income tax return and taxed.
Normally an RRSP contribution defers income tax (provides a tax deduction) by offsetting taxable income. It can do this, OR it can be used to repay the HBP. It can’t do both.
If you didn’t apply the $5,000 RRSP contribution towards your HBP, the payment from your corporation and your RRSP contribution would cancel each other out. But you lose that cancelling out if you apply the RRSP contribution to the HBP.
I am thinking about withdrawing $35,000 for a down payment from the HBP but I also have maxed out my TFSA and have another $35,000 available in savings. Should I use my savings for the down payment and let my RRSP grow?
It depends on what your goals are in the short term. Remember that investments held in an RRSP and in a TFSA are more or less the same: both grow tax-free in exactly the same way. The only differences come when you make a contribution, or a withdrawal.
If you withdraw from your RRSP, then starting a couple of years from now your future RRSP contributions will be weakened in their tax-deferring strength somewhat, as the first part of them always end up being cancelled out by your required HBP repayments. So your tax refunds may go down a bit. So from that perspective, it would appear to be a better move to take the money from your TFSA.
But there’s another option, if you have at least $35,000 worth of contribution room in your RRSP. You could take $35,000 from your savings and put it in your RRSP, then withdraw your $35,000 HBP.
What’s the advantage? You’d get a potentially huge tax refund based on the gigantic $35k contribution you made in the year. So you’d end up freeing up a bunch of cash just in time for your move.
Sure, you’d end up paying it back in tax (i.e., the weakening of the RRSP-based tax deferral) over the next 15 years or so, but depending on how you want your cash flow to work in the near future it’s something to consider.
I didn’t think about the HBP when a change in career and COVID affected my income (down from 60-100K a year to 33K a year) I took my RRSP money out, let SUnlife hold back the taxes, and used it to pay off debts to be able to survive. I emptied it and took the rest, to renovate my house to prepare it to sell as I can no longer afford it.
Then I remembered oh no, I got HBP $10,000 I was paying $704 a year into but in 2019 with the change in income, i did not put any money into my RRSP and now it’s empty and closed. so I have paid into it for 9 years I think, now what do I do? DO i have to open a new RRSP and put money there to cover it, or will the gov assume HBP will come off my tax withholding so maybe I end up having to pay it, but at least it gets done, or am I in trouble?
Hey Tracy. The short answer is: don’t worry about it.
In a year like this one where you are not making a repayment to your HBP, all that happens is that an amount equal to your “required” repayment is added to your taxable income, so you end up paying tax on it. This is called an income inclusion.
So if your repayment was $704 but you didn’t make any RRSP contributions, this year you’ll see $704 added to your income. Multiplied by your probable tax rate of ~20-30%, you’re looking at an added tax bill (or reduced tax refund) in the neighbourhood of $140-215.
Every year of your HBP repayment period is pretty much treated independently of all the others (there are some nuances, but this is basically the case). If things pick up next year you can make your next HBP repayment as usual into a new RRSP. Or you can continue not making the repayment contributions, take your income inclusion, and sleep the sleep of the just.
I haven’t been making RRSP payments since 2016 because I now contribute to a group pension fund. Does this mean that I have not been paying my HBP back since that time? I have tonnes of RRSP contribution room and 7 years left to pay back my HBP. If I max that contribution room will it make up for these “missed” payments? That is to say, if I pay into RRSPs for the next 7 years, will it make up for years when there was no RRSP contribution or are those years just lost?
Hi Wonnita. Every year, that year’s Home Buyers Plan (HBP) repayment is resolved, regardless of what you do. If you make an RRSP contribution and, on your tax return, you designate that contribution as a repayment, the HBP repayment is covered and no taxable amount from it shows up in your income. If you make no RRSP contribution and therefore can’t designate anything as an HBP repayment, the repayment amount shows up as taxable income on your return. In your case, it sounds like the HBP repayment is showing up as income, since (to your knowledge) you aren’t designating anything as a HBP repayment.
Regardless of whether you’re actually designating a repayment, or just leaving the HBP alone and letting each year’s repayment amount get added to your income, at the end of every tax year your HBP repayment is resolving itself, so there’s nothing to fear.
Hi there
Great Topic. I’m still a bit confused as i don’t know if this question was answered. So if I took $30K from a Scotiabank RRSP (lets say), and repaid it all would a 30K Rrsp show up back at Scotiabank or is it in a generic holding account at CRA. If I want to access the money or move it to a new broker where is it located? I hope that makes sense and thank you
Hi Mark. You don’t (necessarily) make Home Buyers’ Plan (HBP) repayments into the specific account from which you made your withdrawal. You make your repayments by contributing to any RRSP account, and designating that contribution as a repayment. So if you take funds from a Scotiabank RRSP, you could make contributions to any RRSP account at any financial institution — say, an RRSP account opened by a new broker at CIBC — and designate those as repayments to your HBP. Meaning that in the end, you withdrew funds from a Scotiabank RRSP, and now they’ve been ‘paid back’ into a CIBC RRSP.
First of all, thank you so much for the great explanation. I still have few question about HBP. So if I don’t make repayment to HBP every year for the next 15 years, but I will contribute to RRSP same amount all this time. What is going to happen in this situation?
Hi Nataliya. There are two ways each year’s Home Buyers’ Plan (HBP) repayment can be resolved, triggered by what you report on your income tax return: either by designating (on your tax return) that an RRSP contribution is a HBP repayment, or by letting the HBP repayment show up on your tax return as a taxable amount. This second situation is what happens automatically if you don’t designate a repayment.
However, in terms of the tax you end up paying, if you make an RRSP conttibution there is no difference between designating that RRSP contribution as a repayment, and just not bothering. It’s confusing, but basically in that second situation (the situation you’re in), the HBP repayment does show up as taxable income, but the RRSP contribution cancels it back out again. It’s hard to explain without sitting down together and writing on the back of a napkin, but the bottom line is, keep doing what you’re doing, and you’ll be fine.
Hi, thanks for the great article and all the answers. This was very insightful, but there is still one thing that is ambiguous to me.
I am wondering if a non-payment still REDUCES the total amount you have to pay. Like could I just skip a year, pay the income tax on it, but the total is still reduced? Or will the total remain the same?
Example :
Total: $15000
Minimum payment : $1000
I don’t repay the $1000, and pay income tax on it.
Is the new total $14000 or does it stay $15000?
Thanks
Hi Sam. Yes, that is exactly what happens.
Your amount owing on your HBP goes down by the ‘required repayment’ REGARDLESS of whether you actually make that repayment or not.
If you make the required repayment, all well and good. If you don’t, you pay income tax on that amount.
Hi there, I have a unique situation would like to confirm on my understanding. Real example with some make up numbers here:
2017 I borrowed 15000 for HBP, my repayment starts in 2019 ($1K per year paying back)
for tax year 2019, I
1) put $1K in RRSP
2) halfway I took a job in US and declared non-residence in Canada for 2019 Tax Year.
I was expecting to continue paying the remaining $14K balance in the future, then my tax accountant said because I declared non-residence, the HBP plans no longer applies. So what happened is, in my 2019 Canadian tax return, they added +14K to my taxable income so I technically paid the tax to all my HBP balances.
It’s 2020 tax year now, should I still “put back $14K” before another taxable income balance, or my HBP is closed out and I dont have to do anything because I paid the $14K tax once already.
Thanks!
Hi Rose. Great example! No, do not now have to put back $14k if you’ve already declared it as income. Just make sure that CRA understands (via whatever paperwork you and your accountant filed with them) that your HBP situation has been resolved. This is just to avoid red tape and headaches later — in terms of money you’re good to go.
I have a question. While paying back my monthly HBP to my rrsp, can I use RRSP balance to invest in stock market or does it have to stay in rrsp and stay as cash?
Hi Juan. There are definitely RRSP accounts that can hold investments, rather than cash. Discuss it with your financial institution. So long as the assets (cash, investments, whatever) stay inside an RRSP, you’re fine. Remember that if you have assets in one RRSP account and you want to move them to a different RRSP, DO NOT make a withdrawal and re-deposit them — that could trigger tax. Instead, work with your financial institution to arrange a transfer from one RRSP to another, so that it doesn’t count as a withdrawal.
Hi , my repayments for my homeowners RRSP has always been taken when I do my Yearly income tax ! Where has my repayment been going? This year will be my last payment ? Then do I get it back from Revenue Canada ?
Hi Susan. Remember that there are two ways that a Home Buyers’ Plan (HBP) repayment can get resolved: by ignoring it and letting the repayment amount show up as income on your tax return; or by making a contribution to an (any) RRSP.
If you have been ignoring the repayments and not making RRSP contributions, there is no money to ‘get back.’
If on the other hand you have been making RRSP contributions, then the money is there, in the RRSP where you put it. The government doesn’t give it back; you borrowed it from yourself (your own RRSPs) and you’ve repaid it to yourself (back into your own RRSPs).
Hello,
I have couple of questions here:
1. I withdrew 25k from my group RRSP in 2019 under first time HBP. As per rules, it says my repayment won’t start until second year after the year I withdrew under HBP. Does that mean I have to start my repayments from Jan 1, 2021 and I have entire 2021 to make contributions to repay 1/15th amount to HBP?
Or
I need to declare my 1/15th repayment in 2020 tax return I will file in 2021?
2. My employer do match some % of my contributions so does my employer contribution can be counted towards HBP repayment?
Hi Aum. Check the Notice of Assessment (NOA) that was issued after you filed your most recent tax return, or log into MyAccount if you have it set up. It will indicate there whether a repayment (recontribution) to your Home Buyers’ Plan (HBP) is currently required, and how much that repayment is for the current year. Alternatively you can call CRA at 1-800-959-8281 to ask an agent to look up your status for you.
Any contribution to any RRSP can be designated as an HBP repayment. If your employer’s matching funds are going into an RRSP, you can designate that.
Hello, your article, and answers and questions are all very helpful! I am trying to understand though, ultimately if I take out $35,000 from my RRSP for the Home Buyers Program, and pay back the required amount every single year or sooner over the 15 years, so I pay back the $35,000 does this literally mean I have $35,000 sitting in my RRSP account again? Or is it that I am just making payments back to it, like a loan for example, and once its paid back, I don’t have access to any more funds, and the balance in my RRSP is $0? THank you!
Yes, you have the $35,000 sitting in your RRSP account again. Let’s take an example. Say you had $50,000 in your RRSPs, and you decided to take your $35,000 Home Buyer’s Plan withdrawal. So you do that, and now you have only $15,000 left in your RRSPs. A couple of years later you start making RRSP contributions as repayments to your HBP. Fifteen years after that, IF you’ve made every required repayment (in the form of RRSP contributions) you’ve re-contributed the full $35,000 to your RRSPs and now have your $50,000 again.
Good Morning.
I have repaid my RRSP for the purchase of my first home.
I did not have any thereother RRSP at the time. I do not have any RRSP now. I have moved several times and don’t recall the bank that I dealt with at that time.
How can I locate my RRSP?
Hi Eileen. The only way to repay your Home Buyers’ Plan (HBP) withdrawal is by making contributions to your RRSP (any RRSP, not necessarily the one from which you made your withdrawal). So if you’ve been making your repayments to an RRSP (any RRSP), that’s where the repayments are. If you’ve contributed back into an RRSP, then you have an RRSP.
However, making repayments is not the only way to clear an HBP debt. If you don’t make the repayment (contribution to an RRSP), the repayment amount still disappears, but only by being added to your income and taxed. If your HBP was never actually repaid (by contributions to an RRSP) but instead went away over the years by being gradually added back into your income, then there’s no RRSP with your money in it.
Hi , I missed two years of repayment on my HBP so they were designated as income inclusions. This year I put a larger sum in the RRSP but what I’m wondering is should I designate the exact annual amount owing for HBP when I file my income tax or is it automatically designated and the remaining RRSP contribution is used to reduce my taxable income? I’m assuming I can’t make up for the previous two years and that the only benefit of paying more would be to decrease my future annual repayments?
Hi Lisa. I’m impressed with how well you understand the mechanism of the system! No, the designation is not automatic, though if you don’t specify, the mathematical outcome is the same as if you’d designated exactly the required repayment. If you’d prefer to designate more you can, and yes, it would decrease your future annual payments.
You are correct: the net effect of paying your HBP down faster is that they ‘eat up’ less of your future RRSP contributions so that they have more power to reduce your taxes at that time.
Hi there
What happens if I sell my house and still owe money in the HBP. do I have to pay the full amount back on the sale of the House?
Nope! But you will still be experiencing the HBP repayment process over the usual 15-year period until the full amount you withdrew has been either re-contributed into an RRSP, or taxed.
Do the rrsp contributions designated to hbp payments still increase the overall balance in your rrsp? For example if there is $1000 in my rrsp and I contribute another $1000 but allocate $500 towards hbp payments will my rrsp balance then become $1500 or $2000? Thanks
In your example, your RRSPs available for deduction will be $1,500.
Hello, I paid in full my HBP and no one can explain where the money are right now. I had them in my account with BMO, I used them to buy a house, every year i paid them back for 15 years and now i want to know where they are. Please help me as i can find a logical explanation, not even from the CRA. Thank you in advance for your help.
If you paid back your HBP via BMO, the money is in an RRSP in your name at BMO.
SO, I took the money out of the Royal Bank RRSP for the home buyers plan, does this mean it is going back into that RRSP which I do not even track anymore?
No. You just make RRSP contributions, to any institution, and these can be considered your HBP repayment when you file your income tax return. You can make the contributions to any RRSP held by any bank. No one makes or moves those contributions but you.
Just trying to understand, so the bank you withdraw from your RRSP from for the HBP is the bank CRA sends the repayments back to?
You don’t make HBP repayments to CRA. You make RRSP contributions, and then designate them on your tax return as HBP repayments. You do not have to make the contributions to the same institution or the same account as you withdrew from when you took out your HBP. The repayment contributions can be made to any RRSP account. And there’s nothing special about the contributions, either. Just make contributions, and report them on your income tax return as usual. No one moves that money but you.
Hi,
I took a hbp loan back in 2013. I have made yearly payments every tax season to repay the loan. Since 2013, I have both transferred and closed my rrsps, as I’m contributing to a pension plan. So, if I have no rrsp plan to donate to, where is my money going? Can I withdraw any of the repaid funds?
The only way to repay your HBP is by making RRSP contributions. If you were making your repayments in the past, you made them by contributing to an RRSP. If you withdrew or transferred everything and closed your RRSP accounts, the amounts you withdrew or transferred included the amounts you repaid to your HBP. I don’t know where your money is going to now — it’s either going to an RRSP or you’re not actually making your repayments (which is possible, and it’s fine!). You are the one who makes the contributions (=repayments) or doesn’t — no one else takes your HBP repayments and puts them anywhere. It’s all you.
Hi I have a question Im paying back every year HBP, and I will finish paying this year and the company that I withdraw the money close my account,I do not have RSP with any bank because the company I was working close operation in Canada, how I withdraw all the money I use to buy my house and im paying tru HBP,and I do not have any RSP account, how I claim that money back too me?
Something here doesn’t add up. The only way to repay your HBP is to make RRSP contributions. So either you have an RRSP (where you’ve been making the RRSP contributions), or you haven’t been repaying your HBP. The RRSP contributions don’t have to be made to the same institution where you made the HBP withdrawal, but they have to be made to an RRSP.
Payed back HBP, I can see all the payments on my tax assessments. But where do I go to get this money? The bank I originally was using TD, says the rrsp has nothing there. So when you pay it back where does it go?
Hi Suzanne. There are TWO ways a repayment to the HBP can be resolved: either you make an RRSP contribution to cover the ‘required repayment,’ in which case the money is in whatever RRSP to which you contributed; or CRA forgives the repayment but charges you income tax on the unpaid amount. The second option is what may have happened here. Your Notice of Assessment (NOA) will always show that the repayments have been made, regardless of whether or not you actually made them, because the repayments are always off the table one way or the other.
When my partner and I withdrew RRSPs for our HBP, we withdrew her portion from a spousal RRSP and mine from my individual RRSP. Now that we need to pay them back, do her funds need to go back in the same spousal RRSP, or can it be any RRSP as long as its in her name?
Since you were both able to make your own withdrawals, hers came from her RRSPs (spousal or not) and yours came from your RRSP. To make HBP repayments you must each make contributions back into any RRSP in your own name, she into hers, you into yours.
Hi – Thank you so much for this article! I have a question and wonder if you could please provide further insights to. So I have been paying RRSP (up to contribution room) using my bonus directly from the employer. I have a situation where my bonus this would be quite larger than expected, so my questions are:
1. I would like to pay more than the minimum required HBP balance – is there a maximum amount i can designate to HBP in one year ?
2. If I pay more than the min. balance, is this repayment considered taxable?
So using an example, if I have $10,000 bonus directly from employer that I would like to contribute to RRSP, with $4K contribution room.
– contribute 4K to RRSP
– contribution 1K to cover minimum HBP requirement and 5K additional to pay out more HBP
Is this okay?
Would like to avoid any risk of over-contribution – but not sure if this is an allowed approach, or whether this has any positive tax impact? Thank you so much!
Hi Mina. Yes! You can do what you want to do. Just indicate how much of your RRSP contribution you want to allocate to your HBP on your Schedule 7. There is no tax payable on this, but it does mean that less of your RRSP contribution is available to actually bring your tax bill down this year.
Remember: an RRSP contribution can be used to either pay down the HBP, or reduce tax. So if you choose to divert more of your RRSP contribution to the HBP this year, you will have a higher tax bill or a lower refund than you’d have if you only allocated the ‘required’ repayment.
Hi, It’s been some time since this was posted but I felt like I should try asking anyways.
I took out $10,000 of my work pension RRSP account. My employer mandates that a certain percentage of my biweekly income is placed in this pension account and then they match it (this is all done before I get money in my own personal bank account). Can I use these contributions as HBP repayments? (including the portion matched by my employer).
For example say this year $4000 was deducted from my paystubs for this group RRSP and then my employer matched it with another $4000. Could I claim all $8000 as repayments? If so, what are the cons of doing it this way rather than just making more payments on top of my regular pension contributions?
Hi Matthew. Yes, you can assign the full amount to your HBP. You just have to specify that you want to do that on your Schedule 7. The pro is that more of your HBP is paid off and — if that represents the total owing at this point — once it’s totally paid off it will not affect (or use up) future RRSP contributions.
The con is that this year, your RRSP contributions will not reduce your tax liability, because they’ve been diverted to another purpose. What that means is that your tax bill will be higher, or your tax refund will be lower, than it would be if you had diverted less to your HBP repayment.
Hi,
super helpful article, thanks! I haven’t found the answer to my specific question yet, though, so I’ll give it a try:
I took out 15K out of the spousal RRSP my partner set up for me and so my repayments are 1k a year. But I have now become a stay-at-home parent and don’t have an income. My partner and I would still like to contribute 1k to my RRSP but we are wondering whether it makes sense to declare this as a repayment in our situation.
If we don’t declare it as a repayment, I will be taxed on it. But since it’d be my only income the tax rate would be 0; and my partner could reduce his tax burden that way because it would be a regular spousal rrsp contribution.
Is that correct?
Hi Lenny. Your understanding is correct. If you were my client I would advise you to not make your HBP repayments and allow the income inclusion, for this very reason.
Another option: you and your spouse could make a contribution to your RRSP just to add to your retirement savings, but not designate it as a HBP repayment and not take the deduction now (since you have no taxable income against which to take the benefit).
The undeducted contribution can be carried forward indefinitely, until you’re back in the workforce. At that time, when you do have taxable income, you can apply any undeducted contributions and get the tax benefit at that time.
Hi. I tried to find an answer to my question here and elsewhere with no luck. Thanks in advance for your answer!
I have 14 remaining HBP repayments, each of $500. Can I declare the full amount ($7,000) as income inclusion in one year? If I do so, I assume the CRA would consider my full HBP withdrawal to have been repaid?
Yes, but it would require two steps: First you’d have to make a $7,000 contribution to an RRSP and designate the full amount as a HBP repayment (line 24600 on Schedule 7). Then you can withdraw it all and – like all regular RRSP withdrawals – you’d get a T4RSP showing $7,000 of taxable income. In that way you’ve essentially taken the whole income inclusion at once. One caveat: when you make an RRSP w/d like this you don’t get the contribution room back. So if you typically like to max out your RRSP be aware that you’ve just ‘used up’ $7,000 worth of space.
Hello, wondering if you could assist me with a question regarding the HBP. I withdrew from my RRSP’s for the HBP however I have since cashed out what was left in the RRSP’s and they are closed. I’m not making contributions back to the RRSP’s therefore not making HBP repayments. On each tax return the Gov adds a certain amount to my income because i didn’t designate a repayment under the Home Buyers’ Plan. I’d like to clean up the remainder of what is owed on one tax return rather than split it out equally over the remaining years. What is the best way to do this?
Many Thanks in advance! Appreciate your help.
To ‘clear up’ the HBP repayments without letting the income inclusions to continue you need to make all the repayments. The only way to make repayments is in the form of RRSP contributions. So check your most recent Notice of Assessment (NOA) to see how much is left to repay, then open an RRSP at any bank and make a contribution of that amount. On your tax return you’ll include complete Schedule 7 (RRSP contributions) to record the contribution and then enter the full amount on line 24600 – Contribution designated as a repayment under the HBP.
Thanks. So is there any way to increase the income inclusion on just one tax return for the entire remainder that i owe, instead of splitting it equally out over several years?
Yup. Make an RRSP contribution in the amount of income inclusion you want. Designate the entire contribution as a repayment to your HBP. Then make a withdrawal of the same amount from your RRSP. The withdrawal will be treated as new income, so you will in effect have ‘covered’ that portion of your HBP and taken the same amount as an income inclusion.
Thanks. Is there a way to clear up the remaining amount owed without making a RRSP contribution? Something similar to what is happening currently with the Gov increasing the income amount on the tax return but instead of this happening on every tax return, just do it all on one tax return?
Hi There,
This is my first year that I will have to start paying back towards the HBP and designate some of my RRSP contributions towards repayment on my taxes.
Where I am confused is how to actually file that when doing my taxes. I understand there is a schedule 7 form to fill out but I’m confused what exactly I have to fill out and if I just submit it as if it is another T4 for example when filing electronically myself.
I have contributed more into my RRSP (between my own and work group contributions) than the required repayment amount for this year. Do I just fill out section B or do I need to fill out section A with the total RRSP contributions for the year (both mine and works) and then note how much of that I want to put towards repayment?
Thank you for your assistance.
Enter your total contributions on Schedule 7 where indicated. Line 24600 of Schedule 7 is where you enter the amount of RRSP contribution you want to designate to your HBP. Note that an RRSP contribution is not a T4 (that’s for income earned at a job).
Hello, thank you for doing this thread!
If I decide to not make repayments for my HBP, can I declare the full amount in one given year as taxable income, rather than spreading it out each year over 15 yrs ?
Thanks,
Yes! See my answer to Guy.
Hello, I should clarify that I was asking whether I can choose to not repay the HBP and declare the full amount as income in one year instead of 15.
Thanks!
No, you can’t. If you don’t designate a repayment, only that year’s required repayment will be included in income for that year.
In 2020 I withdrew 24k under HBP and it’s my first repayment year. I repaid 1400 by adding it to the HBP line of my tax form and I also had 11k of taxable RSP income due to withdrawals in 2022 (which were not related to the HBP, but were related to cashing out other RRSPs when I changed employers and ended an existing plan).
My HBP balance on the CRA website is now showing at 11,8k, but I expected it to be much higher eg. My initial 24k-1400 so more like 22,6k. Is this an error in that the CRA has applied the other withdrawal here, or is this expected behaviour based on me moving my funds?
Based on the information here, I can’t explain what happened. Contact CRA at the Individual Inquiries line: 1-800-959-8281. Have your most recent Notice of Assessment (NOA) available because they’ll ask you questions about it to confirm your identity. Speak to an agent — they really are there to help.
I left a comment last night it seems to of been deleted for some strange reason.
The question was and is: in 2008 I took out my RRSP for the HBP in the amount of 20k. Over the years I have re-payed this amount of 1250$ each year on my taxes. Where did this money go? Or did I just repay back the deferred taxes with that payment of 1250$? Any help would be appreciated
You made a withdrawal from your RRSP under the HBP. You put that money toward a house. So that withdrawn money is now part of the equity in your home. Since then, you say you’ve repaid that amount gradually. Did you repay the $1,250 by making a contribution of $1,250 to your RRSP? If so, that’s where the money is, in the RRSP where you put it. Alternatively, did the $1,250 show up as income every year on your tax return, so that you had to pay tax on it? If so, there’s no repaid money; you simply withdrew it and never repaid it anywhere. So the original withdrawal is in your house (either way). Either the same amount was re-contributed to your RRSPs where it currently lies; or nothing was re-contributed.
I’ve read every single comment and I now understand that I HAVE NOT been repaying my HBP. Even though I thought I was (like a lot of other people commenting here).
FYI – When you let it go on your income tax to the CRA as a line item, you are paying income tax on the borrowed amount, NOT PAYING the HBP back.
ADVICE – Get ahead of it and move money over into an RRSP BEFORE tax season. So that you are not paying income tax on that amount!
Hi Kalyn, yes, it’s true that if you were not making the RRSP contributions you technically weren’t paying the HBP back. But having paid the tax on the inclusion, you really don’t have anything to worry about, as the payment has been taken care of (via the inclusion). The point is, at the end of the 15 year repayment period, even if you never put another dollar of ‘repayment’ into your RRSP, you’ll have paid back the income tax deferral and the HBP account will still show that you’re good to go. Just a different movement of money, but not necessarily a problem.
Hello,
I just have a question regarding my situation. I did HBP but I decided to move to the US prior to starting my repayments (my parents and sister’s family are staying at the house we all bought). 2023 was supposedly my first year, but I didn’t contribute nor made any Canadian income. Now the repayment is showing as RSP income. Since RSP income is the only income I’m getting taxed on, I don’t owe or get any taxes refunded. Does this still reduce the HBP balance years after? Do I have anything to worry about?
If you have ceased to be a resident of Canada, your emigrant (final) Canadian tax return will show the full amount of your outstanding HBP balance as income and you’ll be taxed on it. Be aware that depending on how much you withdrew, this ‘income’ can be enough to make you taxable!