I am buying a home

Whether you are buying your first home (congratulations!), buying a new home or renovating your current home, there is a program to help.

Home Buyers’ Plan – allows you to withdraw from your Registered Retirement Savings Plan (RRSPs) to buy or build a home

First-Time Home Buyer Incentive – lowers your monthly mortgage payments on your first home

GST/HST new housing rebate – gives you back some of the GST/HST paid on a home

Home buyers’ amount – reduces your income taxes by providing a credit for the purchase of a home

Definitions for Home Buyer’s Plan (HBP)

Arm’s length – refers to a relationship or transaction between persons who act in their separate interests. An arm’s length transaction is generally a transaction that reflects ordinary commercial dealings between parties acting in their separate interests.

Common-law partner – a person who is not your spouse, with whom you are living in a conjugal relationship, and to whom at least one of the following situations applies. They:

• have been living with you in a conjugal relationship and this current relationship has lasted at least 12 continuous months

Note

In this definition, 12 continuous months includes any period you were separated for less than 90 days because of a breakdown in the relationship.

• is the parent of your child by birth or adoption
• has the custody and control of your child (or had custody and control immediately before the child turned 19 years of age) and your child is wholly dependent on that person for support

Eligible withdrawal – this is an amount you withdraw from your RRSP after you have met the HBP conditions that apply to your situation.

First-time home buyer – Unless you are a person with a disability or you are helping a related person with a disability buy or build a qualifying home, you have to be a first time home buyer to withdraw funds from your RRSP(s) to buy or build a qualifying home under the Home Buyers’ Plan.

You are considered a first-time home buyer if, in the four year period, you did not occupy a home that you owned, or one that your current spouse or common-law partner owned.

Four-year period – The four-year period means the four years prior to a home purchase. The period begins on January 1 of the fourth year before the year you withdraw funds from your RRSP, and ends 31 days before the date you withdraw the funds.

HBP balance – your HBP balance, at any time, is the total of all eligible withdrawals you made from your RRSPs minus the total of all amounts you designated as an HBP repayment and amounts included in your income (because they were not repaid to your RRSPs) in previous years.

Non-arm’s length – generally refers to a relationship or transaction between persons who are related to each other. However, a non-arm’s length relationship might also exist between unrelated individuals, partnerships or corporations, depending on the circumstances. For more information, see the definition of Arm’s length.

Participant – you are considered an HBP participant if:

• you make an eligible withdrawal from your RRSP to buy or build a qualifying home for yourself
• you make an eligible withdrawal from your RRSP to buy or build a qualifying home for a related person with a disability or to help such a person buy or build a qualifying home
• you are the spouse or common-law partner of a deceased HBP participant and you have elected to continue making the repayments of the deceased participant

Participation period – your HBP participation period starts on January 1 of the year you make an eligible withdrawal from your RRSP and ends in the year your HBP balance is zero.

Person with disability – you are considered a person with a disability if you are entitled to the disability amount. For purposes of the HBP, a person with a disability includes you or a person related to you by blood, marriage, common-law partnership or adoption. A related person with a disability does not have to reside with you in the same home.

We consider a person to be entitled to the disability amount if one of the following situations applies:

• the person was entitled to the disability amount (line 31600 of their Income Tax and Benefit Return) for the year before the HBP withdrawal, and still meets the eligibility requirements for the disability amount when the HBP withdrawal is made
• the person was not entitled to the disability amount for any year before the HBP withdrawal, but a Form T2201, Disability Tax Credit Certificate, certified by a medical practitioner, is filed for the person for the year of the HBP withdrawal. If Form T2201 is not approved, your withdrawals will not be considered eligible withdrawals under the HBP, and will have to be included in your income for the year you receive them.

If all other eligibility requirements are met, we consider a person to be entitled to the disability amount even if costs for an attendant or for care in a nursing home were claimed as a medical expense by or on behalf of that person.

Pooled registered pension plan (PRPP) – is a retirement savings plan to which you or your employer or both can contribute. Any income earned in a PRPP is usually exempt from tax as long as it remains in the plan.

Qualifying home – a qualifying home is a housing unit located in Canada. This includes existing homes and those being constructed. Single-family homes, semi-detached homes, townhouses, mobile homes, condominium units, and apartments in duplexes, triplexes, fourplexes, or apartment buildings all qualify. A share in a co-operative housing corporation that entitles you to possess, and gives you an equity interest in a housing unit located in Canada, also qualifies. However, a share that only provides you with a right to tenancy in the housing unit does not qualify.

Related persons – are not considered to be dealing with each other at arm’s length. Related persons include individuals connected by a blood relationship, marriage, common-law partnership, or adoption (legal or in fact). A corporation and another person, or two corporations, may also be related persons.

Resident of Canada – You have to be a resident of Canada when you receive funds from your RRSPs under the HBP and up to the time you buy or build a qualifying home. For more information about residency status, see Determinig your residency status or call 1-800-959-8281 (toll free within Canada and the United States), or 613-940-8495 (from outside Canada and the United States). We accept collect calls by automated response. You may hear a beep and experience a normal connection delay.

If you become a non-resident after a qualifying home is bought or built, you cannot cancel your participation in the HBP. However, special rules will apply to the repayment of your HBP balance. For more information, see The HBP participant becomes a non-resident.

RRSP deduction limit – the maximum amount you can deduct from contributions you made to your RRSPs or to your spouse’s or common-law partner’s RRSP for a year (excluding transfers to your RRSPs or certain types of qualifying income). The calculation is based, in part, on your earned income in the previous year. Pension adjustments (PA), past service pension adjustments (PSPA), pension adjustment reversals (PAR), and your unused RRSP deduction room at the end of the previous year are also used to calculate the limit.

Specified pension plan (SPP) – a pension plan or similar arrangement that has been prescribed under the Income Tax Regulations as a “specified pension plan” for purposes of the Income Tax Act (currently the Saskatchewan Pension Plan is the only arrangement prescribed to be a specified pension plan). Many of the rules related to RRSPs also apply to SPPs.

Spouse – a person to whom you are legally married.

Unrelated persons – might not be dealing with each other at arm’s length at a particular time. Each case depends upon its own facts. The following criteria will be considered to determine whether parties to a transaction are not dealing at arm’s length:

• whether there is a common mind which directs the bargaining for the parties to a transaction
• whether the parties to a transaction act in concert without separate interests; “acting in concert” means, for example, that parties act with considerable interdependence on a transaction of common interest
• whether there is de facto control of one party by the other because of, for example, advantage, authority or influence.

Source: CRA