Tax Tip - Delay RRSP Home Buyers’ Plan (HBP) withdrawals until after year-end

October 01, 2019


If you qualify, you and your spouse can each withdraw a specific amount tax-free from your RRSP towards the purchase of a principal residence. The limit for HBP withdrawals has increased from $25,000 to $35,000 for withdrawals made after March 19, 2019. The home must be purchased by October 1 of the year following the year of withdrawal. Amounts withdrawn must be repaid to RRSPs in 15 equal instalments, starting with the second taxation year following the year of withdrawal (amounts not repaid are taxed as an RRSP withdrawal).

If you’re planning on using the HBP towards year-end, consider deferring your withdrawal until after December 31. This will extend your time period for purchasing your home and repaying the amounts withdrawn by one year. You’ll also want to delay your HBP withdrawal if you won’t have received the full amount by January 2020. Under the HBP rules, multiple withdrawals are possible, but all withdrawals must be received in the same calendar year or in January of the following year. Consequently, if you want to withdraw funds after January 2020, you shouldn’t make an HBP withdrawal in 2019. Your BDO tax advisor would be pleased to provide further details.

This tax tip is a publication of BDO Canada LLP on developments in the area of taxation. This material is general in nature and should not be relied upon to replace the requirement for specific professional advice. The information in this tax tip is current as of September 3, 2019.