The Home Buyer’s Plan is a program established by the federal government that allows individuals, who are qualified first-time home buyers (as defined by Canada Revenue Agency) to withdraw of up to $25,000 tax-free from your RRSPs to buy or build a qualified home, located in Canada, that must be the buyer’s principal residence.
This amounts to $25,000 per applicant or $50,000 per couple. The borrower must be a resident of Canada and must pass the eligibility test. To participate, you must complete “Form T1036” and provide this form to the institution that holds your RRSPs that you would like to withdraw. These forms can be easily downloaded from the CRA website.
If you participate in the Home Buyers’ Plan, you must repay the amount you withdrew within a 15-year period in an amount no less than 1/15th per year. If you repay less than the amount you should repay, that difference is then added to your taxable income on your income tax return and you are taxed at your marginal tax rate.