RRSP First-Time Home Buyer: HBP Repayment and 90-Day Rule

The Home Buyers' Plan (HBP) lets first-time buyers use RRSP savings toward a home without paying tax on the withdrawal, but the money has to go back into your RRSP over time. Miss a repayment and the shortfall becomes taxable income.

This article explains who qualifies, how the repayment schedule works, what the 90-day rule really is, and how the HBP compares with the first home savings account (FHSA). It is general information, and your tax situation may need an accountant.

Who qualifies and how much you can take out

The HBP withdrawal limit is currently $60,000 per person. You must be a Canadian resident and have a written agreement to buy or build a qualifying home at the time of withdrawal; a pre-approved mortgage does not count. You must acquire or build the home before October 1 of the year after the year of your first withdrawal, and intend to occupy it as your principal place of residence within one year of buying or building it.

The first-time buyer test is generally met if 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 withdrawal must come from RRSPs where you are the annuitant, and locked-in and group RRSPs generally do not qualify. Withdrawals are only allowed in the calendar year of the first withdrawal and in January of the following year.

The 90-day rule is really an 89-day window

Many people believe money must sit in an RRSP for 90 days before it can be used for the HBP. That is not how the rule works. The rule affects deductibility: 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.

In practical terms, a contribution made shortly before you withdraw may not give you the deduction you expected. If you are planning to contribute and then withdraw, talk to an accountant about timing first.

The 15-year repayment schedule

The repayment period is 15 years, and normally it starts in 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. Because relief periods have changed in the past, confirm the start year that applies to you on the CRA's current information.

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 in the first 60 days of the next year, and designating the contribution on Schedule 7 (line 24600). Contributions to a spouse's plan, transfers from other plans, and FHSA funds cannot be designated.

CRA sends an HBP statement of account with your notice of assessment, or on Form T1028, showing the amount repaid, the remaining balance and the minimum due next year.

What happens if you miss a repayment

If you repay less than the minimum, the shortfall is added to your income on line 12900; if you repay nothing, the full minimum is added. That can create a tax bill you did not plan for. You can also repay extra in a year to lower later minimums.

If you want to use the plan again later, you must repay any outstanding balance from a previous HBP withdrawal first. Otherwise the new amount is taxed as a regular RRSP withdrawal.

HBP compared with the FHSA

You can use an HBP withdrawal and a qualifying FHSA withdrawal for the same home, as long as you meet all conditions at the time of each withdrawal.

Unused FHSA room carries forward up to $8,000, so the most you can contribute in one year is $16,000, and the carry-forward does not raise the $40,000 lifetime limit.

What to do next

• Confirm you meet the first-time buyer test, including your spouse or partner.
• Check that the RRSP you plan to use is one where you are the annuitant and is not locked-in.
• Wait until you have a signed agreement to buy or build before withdrawing.
• Talk to an accountant about contributions made within 89 days before the withdrawal.
• Mark your first repayment year and the 60-day deadline in your calendar.
• Review your HBP statement of account each year after your notice of assessment.

Frequently asked questions