First-Time Home Buyer RRSP Withdrawal Rules in Ontario

If you have savings in an RRSP, you may be able to use part of them toward a first home without paying tax on the withdrawal at the time. The federal program that allows this is the Home Buyers' Plan, or HBP. It has strict rules about timing, the type of RRSP, and repayment.

This article covers the limit, who qualifies, how timing works around your closing, and what repaying looks like. Because a withdrawal made at the wrong time can be taxed as ordinary income, it pays to line up your steps before you take money out.

The limit and the basic idea

The HBP withdrawal limit is currently $60,000 per person. In a couple, each person is tested on their own, so two eligible buyers each have their own limit. Confirm the current figure before you rely on it, since government budgets can change home-buyer amounts.

The money is not a gift from your RRSP. HBP withdrawals are repayable, unlike qualifying FHSA withdrawals, which are non-taxable and not repayable.

Who is eligible

The main conditions are:

• You are a Canadian resident.
• You have a written agreement to buy or build a qualifying home at the time you withdraw.
• You acquire or build the home before October 1 of the year after the year of your first withdrawal.
• You intend to occupy the home as your principal place of residence within one year of buying or building it.
• You pass the first-time buyer test.

The first-time buyer test generally means you did not live in a home you owned or jointly owned as your principal residence in the current calendar year before the withdrawal or in the preceding four calendar years, excluding the 30 days before the withdrawal. Your current spouse or common-law partner is tested the same way.

The type of RRSP also matters. Withdrawals must be from RRSPs where you are the annuitant, and locked-in and group RRSPs generally do not qualify.

Timing around your closing

Timing is where many buyers run into trouble. A pre-approved mortgage does not count as the written agreement; you need a signed agreement to buy or build before you withdraw. A pre-approval is only an estimate of the maximum mortgage and likely rate, and it does not guarantee approval.

There is also the so-called 90-day rule, which is really an 89-day window. You cannot deduct the amount by which your RRSP contributions in the 89 days before an HBP withdrawal exceed the RRSP's fair market value after the withdrawal. Contributions designated as HBP repayments are not caught. If you plan a last-minute top-up contribution, speak with an accountant first.

If you made an earlier HBP withdrawal, you must repay the outstanding balance before making a new one. Otherwise the new amount is taxed as a regular RRSP withdrawal.

Repaying what you took out

The repayment period is 15 years, normally starting the second year after the withdrawal. For first withdrawals from January 1, 2026 to December 31, 2028, the start is deferred to the fifth year after the year of the first withdrawal, so a 2026 first withdrawal means repayments begin in 2031. Confirm the current start year with the CRA or an accountant when you withdraw.

The minimum repayment each year is the remaining balance divided by the years left in the period; for example, $16,500 divided by 15 is $1,100. You repay by contributing to an RRSP, PRPP or SPP in the year or the first 60 days of the next year and designating it on Schedule 7 (line 24600). Contributions to a spouse's plan, transfers from other plans, and FHSA funds cannot be designated.

If you repay less than the minimum, the shortfall is added to your income on line 12900, and if you repay nothing, the full minimum is added. You can repay extra to lower later minimums. CRA sends an HBP statement of account with your notice of assessment, or Form T1028, showing the amount repaid, the remaining balance and the minimum due next year.

Combining the HBP with an FHSA and the Ontario refund

You can use an HBP RRSP withdrawal and a qualifying FHSA withdrawal for the same home, as long as you meet all the conditions at the time of each withdrawal. HBP repayments cannot be made with FHSA funds.

Ontario also has a first-time homebuyer land transfer tax refund of up to $4,000. Its eligibility rules are different from the HBP's, including that you have never owned an eligible home anywhere in the world. Do not assume that qualifying for one means you qualify for the other.

What to do next

• Check that the RRSP you plan to use is one where you are the annuitant and is not locked-in or a group plan.
• List past home ownership for you and your spouse or partner over the last five calendar years.
• Do not withdraw until you have a signed agreement to buy or build.
• Mark the withdrawal calendar year and the following January on your timeline.
• Ask an accountant about any recent RRSP contributions before withdrawing.
• Plan how and when you will make repayments and keep your CRA statement.

A lawyer reviewing your agreement of purchase and sale can help confirm the closing date works with these deadlines, and an accountant can confirm the tax side.

Frequently asked questions